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IAG (IAG) and TUI (TUI) slump on fresh concerns about summer travel
British Airways owner IAG (IAG), TUI Group (TUI) and easyJet (EZJ) all closed lower in London on Monday as a third wave of COVID-19 cases in Europe put a potential summer of overseas travel in doubt.
Deutsche Bank decided to downgrade its rating for IAG to ‘hold’ after it said that the multinational airline holding company had recently benefited from expectations of a rebound for aviation this summer.
The success of the UK’s vaccination programme initially raised hopes of holidays to the continent by 17th May, but this now appears unlikely.
Several countries in the EU announced stricter measures to combat a recent surge in coronavirus cases over the weekend.
UBS said on Monday that a return to some sort of normality could take time as there were still travel restrictions in place for 85% of intra-EU routes.
Analysts believe that those restrictions need to ease significantly before any meaningful recovery can occur.
They added: “While demand should pick up from the second quarter of 2021 the economic backdrop is still challenged compared 2019.”
The EU has also struggled with its vaccination rollout and is currently at odds with the UK about access to shots from AstraZeneca (AZN).
While there is less optimism about travel now compared to a month ago, Westminster is still waiting until April to outline its plans for international trips.
IAG was among a number of travel-related companies that slumped into negative territory on the London Stock Exchange on Monday.
IAG eventually finished down 5.20% at 195.95p, which is around 25p short of the 220p price target set by Deutsche Bank.
EasyJet and TUI also fell, closing 5.43% and 4.93% respectively to 941.20p and 378p.
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