Ready for take off - Airline stocks are soaring as a Brexit-free summer may revive holiday bookings

FILE PHOTO: An EasyJet Airbus A320-200 aircraft takes-off from Zurich Airport January 9, 2018.   REUTERS/Arnd Wiegmann/File Photo

Thomson Reuters

  • Shares in easyJet, Ryanair, British Airways-owner IAG and other airline stocks rose on Thursday as investors bet on a surge in summer-vacation bookings now that Brexit is delayed.
  • EasyJet warned last week that Europeans were holding off on buying plane tickets to and from the UK due to the "many unanswered questions surrounding Brexit."
  • The Brexit delay is just a temporary reprieve for easyJet, as it assumed "a more certain Brexit outlook" would provide a tailwind in the six months to September.
  • Watch easyJet trade live.

European airline stocks climbed on Thursday as investors bet a delayed Brexit would spark a surge in bookings during the critical summer season.

Shares in easyJet, Ryanair and British Airways-owner IAG all rose between 4% and 8%. Wizz Air and Jet2-owner Dart Group also rose 2%, while travel group TUI's stock jumped 6%.

"The European airlines are rallying as the risk of a demand shock with a disorderly Brexit abates," Cantor Fitzgerald analyst Robin Byde told the Evening Standard.

The rebound came at the right time for easyJet, which warned last week that Europeans were holding off on booking their summer vacations due to the "many unanswered questions surrounding Brexit."

Hesitant travelers depressed easyJet's ticket sales and pushed its seat prices down about 7% in the six months to March, prompting the group to adopt a more cautious outlook for the summer. Its shares dropped a tenth on the news and dragged rivals stocks down with them.

UK Prime Minister Theresa May's agreed extension of theBrexit deadline to 31 Octobermay well be the sunshine needed for Europeans to book their summer flights. But it only represents a temporary parting in the clouds.

EasyJet guided towards revenue per seat rising in the six months to September - after it shrunk more than 7% in the first half - partly due its "assumption of a more certain Brexit outlook." Given the lack of a resolution to date, it can no longer make that assumption.


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