Airlines take another hit as Merkel puts summer travel plans in doubt

imageStock Markets13 hours ago (Jun 28, 2021 10:52)

© Reuters.

By Samuel Indyk – Shares in UK-based airlines were under pressure again on Monday as hopes for the travel industry to return to normal by the summer took another hit.

German Chancellor Angela Merkel is the latest to pour cold water on plans for international travel as she aims to get the EU to agree on a joint position to ban UK travellers from entering the bloc, regardless of whether they have been vaccinated or not.

Merkel also wants to designate the UK a ‘country of concern’ due to the ongoing spread of the Delta variant.

Last week, at the EU Summit, leaders agreed to do everything they can to slow the spread of the virus but failed to agree a common position on travellers from the UK.

Spain was against Merkel’s plan, saying each EU country should be able to make its own decision about who to admit, as is their legal right.

UK travel plans

The UK government announced last week that more countries would be added to the ‘green’ list, allowing passengers to avoid quarantine restrictions upon their return to the UK. However, the list of new additions was slim and Spain, Portugal, France, Italy, and Greece remained on the ‘amber’ list, meaning passengers would have to self-isolate upon their return to the UK, even if they are fully vaccinated.

Spain’s Balearic Islands were added to the government’s ‘green’ list but Spain has today announced it has tightened its rules for Britons travelling to the islands.

Spanish PM Sanchez said travellers will now need to be fully vaccinated or show proof of a negative PCR test before travelling.

“What we are going to do is apply to British tourists who go to the Balearic Islands the same requirements we make of other European citizens,” Sanchez said.

Travel uncertainty

The uncertainty around international travel means that even as rules get relaxed, the risk of being stranded as regulations change and the cost of additional testing is putting travellers off in the near term.

“The ever-changing rules and restrictions mean that trying to plan an overseas holiday has become like a game of snakes and ladders,” said Hargreaves Lansdown Senior Investment and Markets Analyst Susannah Streeter.

“A relaxation of the rules by one country, is swiftly followed by a tightening in another, leaving travellers at risk of being left isolated in a hotel overseas with only a TV remote control for company.”

British Airway parent IAG (LON:ICAG) was trading lower by 4%, EasyJet (LON:EZJ) was down 2.5%, Wizz Air (LON:WIZZ) down 2.5% and Ryanair (LON:RYA) was lower by 2.7%.

Tour operator Tui (LON:TUIT) fell by 4% as the spread in Portugal worsened and German imposed a 14-day quarantine on travellers returning from the Iberian country. Jet2 (LON:JET2) was down 2.6%.

Unsurprisingly, Rolls-Royce (LON:RR) shares were also trading lower as hopes of a return to normal international travel took a further hit, particularly for long-haul travel.

“The group’s core business is servicing and delivering wide body aircraft engines, which are used primarily for long-haul flights,” Streeter added, “demand for which now seems to be receding even further into the distance.”

Airlines take another hit as Merkel puts summer travel plans in doubt

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