‘Encouraging’ passenger data lifts airlines as British stocks end turbulent week

This post was originally published on this site

Passenger data from two popular budget European airlines released on Friday showed a marked increase in travellers in June, providing an encouraging boost to recovery prospects for the travel sector and helping airline stocks higher.

Ireland’s Ryanair said that it flew 5.3 million people in June 2021, up from just 400,000 in the same month in the year prior. Wizz Air, of Hungary, said that its 1.6 million passengers last month was up from 500,000 in June 2020. Shares in both companies are listed in London.

“Airline stocks did their best to fly higher following encouraging numbers from the sector,” said Russ Mould, an analyst at AJ Bell. “Wizz Air managed to fill nearly two thirds of its seats on aircraft in service during June, while Ryanair flew nearly three times as many people that month versus May.”

Shares in Ryanair RYA, +2.16% rose 1.7% while Wizz Air WIZZ, +1.88% stock lifted 0.5%. IAG IAG, +0.30% —the owner of British Airways and other carriers—as well as EasyJet EZJ, +1.22% were other airlines with stocks that caught the updraft of the positive passenger data.

“Under the circumstances, these are positive numbers. However, the airline business model is built on filling planes near or at capacity and then scooping up extra fees on top for everything from early boarding to storing bags,” Mould said. 

Also read: European stocks rise ahead of U.S. payrolls data, closing out trading week marked by delta variant concerns

“The sector needs a continuous flow of people through airports and ongoing Covid restrictions imposed by various governments around the world mean the industry is still some way off from operating smoothly,” the analyst added.

The airline news met an altogether mixed day of London trading, with the FTSE 100 UKX, -0.00% —the index of the top U.K. stocks by market capitalization— flat in late afternoon trading.

Major European stock indexes have had a turbulent week, as the region has been shaken by mounting concerns over the delta variant of COVID-19, which has led to the imposition of new travel restrictions across the region. New restrictions include those from Spain, Portugal, and Malta on travellers from the U.K., where the variant is prevalent.

But analysts noted that stocks have taken it in stride and were set to end the trading week even or slightly higher than on Monday.

Plus: Here’s how different countries are handling arrivals from Delta variant hotspots

And: Here’s how the delta variant could impact markets and what to do, says JPMorgan

“It’s been a testing week for investors, with markets experiencing a couple of nasty days,” said Mould. “Fortunately, U.K. stocks are on track to have recovered all the week’s losses, showing that it can pay to hold your nerve when it comes to investing. Patience is paramount.”

Mould noted that the FTSE 100’s strength came in large part from pharmaceutical and consumer goods companies.

Shares in GlaxoSmithKline GSK, +0.07% rose near 1% before paring gains to settle 0.2% down. The British pharma giant rejected activist investor Elliott Management’s proposal, made yesterday, to shake up its board of directors and begin a process that would put the future of its CEO, Emma Walmsley, in jeopardy. GSK also announced that it had partnered with U.S. group Alector ALEC, +68.99% to develop two drugs for the potential treatment of Alzheimer’s and other neurodegenerative diseases in a deal worth up to $2.2 billion.

Informa INF, +3.63% stock rose 3.5% after shares in the publishing and events group were upgraded by investment bank Berenberg.

Oil prices have slipped from their highs, with benchmark Brent BRN00, +0.01% crude down slightly after surpassing the $76 per barrel milestone. Shares in London-listed oil majors BP BP, -0.86% and Royal Dutch Shell RDSA, -0.93% fell in parallel.

Banks also added weight to the FTSE 100, with shares in Barclays BARC, -1.41%, HSBC HSBA, -1.49%, Lloyds LLOY, -1.39%, and NatWest NWG, -1.64% all trading more than 1% down.

Related Posts