Ryanair and IAG lead further decline in European airline shares

Aer Lingus owner IAG and Ryanair drove airline shares to fall further as stock prices fell further due to rising rates of Covid infection and fears that new variants of the virus no longer restrict travel across the EU.

IAG – which also owns British Airways and Spanish companies Iberia, Vueling and Air Europa – sank as much as 8%; while Ryanair has bottomed out at almost 6%. Lufthansa and EasyJet also saw sharp declines in stock prices, which fell around 8%.

Ryanair shares have fallen more than 7% in the past 12 months, with IAG down more than 66%.

Major European carriers suffered heavy losses on Friday after EU countries agreed to keep borders open but severely restrict non-essential travel.

However, some leaders are calling for border closures to all but essential EU internal movements, which German Chancellor Angela Merkel called a “last resort” last week.

Here the Minister of Transport Eamon Ryan warned of a tougher, stricter and “more suspicious” stance on trips to be made by Ireland, with the government on the verge of “tightening up” on inbound and outbound flights.

David Nabarro – the World Health Organization‘s special envoy on Covid – said Ireland’s recent reduction rate of Covid could be at risk if large numbers of infected people enter the country.

Further consolidation

PwC said last week that the airline industry is likely to see further consolidation this year as pressures persist.

In a report on the state of the aviation sector, he said airlines would need continued access to emergency cash – including government support – and that many carriers will need to rethinking their finances, the size of their fleet and their overall business models in order to simply survive.

He said for most airlines returning to business as usual would not be a viable option, due to rising debt levels and the number of passengers ahead of the pandemic who are not expected to return. before a while.

There will be more aerial casualties, he warned, while for those who survive, their ability to thrive will be more difficult.

Last week Lufthansa chief executive Carsten Spohr said the German air transport giant was effectively losing € 1million every two hours due to the impact of Covid on operations.

Improved vaccines and tests

In an industry research note, Davy said the improved vaccines and testing still left hope for companies this summer. In the medium to long term, the European recovery will be led by low-cost operators, Ryanair and EasyJet in the lead.

Companies like Air France-KLM and Lufthansa have the most work to do to restructure their businesses, he said.

However, Davy said IAG’s takeover could also be more prolonged given its heavy reliance on long-haul routes.

The representative group of airlines, the International Air Transport Association – IATA – has predicted that the industry will end up losing $ 118.5 billion (98 billion euros) in 2020 and that it will lose 38.7 billion. extra dollars this year.

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