Budget airlines had a difficult start to the week after HSBC brokers warned they are in for a turbulent summer.
The Government’s proposed ‘traffic light’ system will make it difficult for the likes of Easyjet, Ryanair and Wizz Air to plan ahead and could leave them flying far fewer passengers as a result, according to analysts.
Britons have been told they can tentatively begin to think about overseas travel again from May 17 as the Government hammers out the details of its new system.
The Government’s proposed ‘traffic light’ system will make it difficult for budget airlines to plan ahead and could leave them flying far fewer passengers as a result, say analysts
This will split countries into green, amber and red categories.
Green is likely to require various Covid tests for travel to and from the foreign country, while amber will additionally need ten days of self-isolation and more tests, while red will include a full-blown (and pricey) ten-day hotel quarantine.
The thinking is that the Government will set the green/amber/red lists in early May and will review them again in early June.
Airlines eagerly geared up to fly last summer before being walloped by a series of last-minute changes to travel arrangements that left holidaymakers facing last-minute cancellations.
Stock Watch – Touchstone Exploration
Touchstone Exploration has tapped into a high-quality reserve of natural gas in the Trinidadian jungle.
The energy explorer said tests of a well in the Ortoire block – in which it holds an 80 per cent stake – showed it could set up production there.
The Caribbean island has the same geology as neighbouring Venezuela, which has some of the world’s richest oil and gas fields.
Shares in AIM-listed Touchstone surged 28.3 per cent, or 25.9p, to 117.5p.
It eventually put fewer people off booking at all. The vicious circle is set to continue this year, as HSBC summed up: ‘The lack of visibility on which countries will be subject to which colour-coded rules means that consumers will struggle to make travel plans and airlines will struggle to plan their capacity for the summer.’
HSBC took aim at the bargain carriers, downgrading Easyjet and Ryanair’s stock from ‘buy’ to ‘hold’.
The bank kept Wizz Air at ‘reduce’ – but also trimmed back share price targets for all three. Easyjet tumbled 3.9 per cent, or 37.6p, to 935.2p, Ryanair by 3.6 per cent, or 0.59 cents to €15.69, and Wizz by 2.2 per cent, or 110p, to 4829p.
Even British Airways-owner IAG – which HSBC said could benefit from transatlantic travel restarting – fell 1.8 per cent, or 3.8p, to 206.35p.
Looking at the stock market yesterday it was impossible to tell that the UK had taken the first steps out of lockdown.
Shoppers were allowed back into stores and pub and restaurant gardens filled up despite snow and frosty winds.
But queues winding along city streets failed to rouse shares in Primark-owner Associated British Foods (down 0.9 per cent, or 21p, to 2463p) and even High Street stalwart Next (down 2.4 per cent, or 196p, to 8100p).
It was a total washout for pubs too, with Wetherspoons (down 1.9 per cent, or 26p, to 1374p), Fuller’s (down 5.7 per cent, or 54p, to 900p) and Marston’s (down 4 per cent, or 4.05p, to 96.25p) all tumbling.
Both of London’s major indexes closed in the red, with the FTSE 100 falling 0.4 per cent, or 26.63 points, to 6889.12, and the FTSE 250 down 0.4 per cent, or 97.71 points, to 22,153.55.
This wasn’t helped by so-called ‘lockdown winners’ – companies that thrived in the online shopping booms during the phases of strict restrictions – such as Ocado (down 2.3 per cent, or 50p, to 2100p) and Games Workshop (down 3.6 per cent, or 380p, to 10120p) also sliding.
Over on AIM, dessert maker Cake Box said there were another 52 franchise stores in the pipeline. The company expects to make record revenues in the year to March, up 16 per cent on 2020.
For some the strong performance may come as a surprise but, as boss Sukh Chamdal has pointed out before, people still celebrate birthdays even during lockdowns. It closed up 2.8 per cent, or 7p, to 261p.
Biotech minnow C4X got a boost from a £360million licensing deal with drugs giant Sanofi to create a treatment for inflammatory diseases that patients can swallow rather than inject.
Its stock soared 7.5 per cent, or 3p, to 43p – even though any products are still a way off.
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