Almost £700m was wiped off the value of London-listed airline stocks on Monday as family summer holidays were thrown into doubt by heatwaves and wildfires gripping Europe.
Shares in Easyjet, British Airways-owner IAG, TUI, Wizz Air and Jet2 sunk lower as Greek authorities stepped up tourist evacuations from the popular resort islands of Rhodes and Corfu where blazes were sweeping across the countryside.
Wizz Air shed 6.3pc, with Easyjet finishing 4.7pc lower and Jet2 down 4.4pc. TUI and IAG closed down 3.4pc and 1.8pc respectively.
The London-listed travel stocks collectively shed £694m in value, according to Bloomberg terminal data.
EasyJet, Jet2 and TUI were among those to confirm they were sending repatriation flights for British tourists to Greece on Monday.
Alex Macheras, an independent aviation analyst, said extreme weather was becoming yet another risk airlines were having to plan for each summer, with strikes also hampering air traffic control operations and the Ukraine war still affecting some flight paths.
He said: “Air travel is vulnerable to just about everything, from security risks to weather and climate-related issues and of course geopolitical issues.
“Unfortunately, these wildfires and heat waves are just another thing to add to an already-long list.”
As well as the wildfires, investors were also spooked by a warning from budget carrier Ryanair that demand for air fares risks cooling as households grapple with surging mortgage payments.
The Irish carrier also cut its full year passenger growth forecast to 183.5 million, down from previous guidance for 185 million, blaming delays in deliveries of new Boeing aircraft.
Ryanair warned that demand for last-minute bookings had softened in late June and early July. The budget airline said it might need to lower fares this winter to boost takeup as higher interest rates squeezed household budgets.
Neil Sorahan, the airline’s finance chief, said: “What we have found in previous slowdowns – if you go back to the global financial crisis – is that people didn’t stop travelling, they just became more price-conscious.
“The question mark is: Will we have to stimulate pricing or not to fill the planes? I don’t know whether we will have to do so in winter or not.”
The weak outlook sent Ryanair’s shares down 6pc in Dublin.
The slump came despite the airline announcing it had almost quadrupled its profits in the three months to the end of June, thanks to booming demand over Easter and the coronation weekend.
Ryanair made a profit of £574m in its first quarter, up from £147m a year earlier.
Fares were 42pc higher, while passenger traffic grew 11pc against weak comparisons a year earlier when demand was impacted following Russia’s invasion of Ukraine.
Mr Sorahan said employment remained high, meaning workers retained paid annual leave and were “still very keen to use that”.
He added that Ryanair would be able to grow market share if fares came under pressure in the months ahead.
Mr Sorahan said: “That’s really where our model comes into its own. You know, our average fare in the quarter just ended was €49, which puts us in the price bracket of most people.
“So given the cost advantage that we have over everybody else, given the strength of the balance sheet, that gives us a big opportunity to go out and grow market share if there is a pullback.”
Despite potential price cuts over winter, Mr Sorahan said average air fares were set to remain above pre-Covid levels for up to four years following cutbacks in capacity during the pandemic.
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