At least £2bn was wiped off the stock market value of Europe’s travel and leisure industry on Friday, in a wide ranging sell-off prompted by the UK government’s decision to take France off the safe-country list and impose a two-week quarantine on travellers.
Rattled investors sent shares tumbling across a broad range of companies with any involvement in the travel and leisure sectors. Other destinations including the Netherlands and Malta were also added to the travel quarantine list.
The widespread sell-off in shares, which included the airport shop owner WH Smith, the jet engine maker Rolls-Royce and the Eurotunnel operator, Getlink, helped drive the FTSE 100 down 2.1% and the Europe-wide Stoxx 600 index down 1.9% by late morning on Friday. France’s leading bourse, the Cac, slumped 2.4%. At least £2bn was wiped off the value of the 16 European companies listed on the Stoxx Europe 600 Travel & Leisure index.
IAG, which owns British Airways, tumbled more than 6% in early trading, making it the biggest faller in the FTSE 100. It is the latest blow for the company, which is in the process of cutting 12,000 staff after reporting a record loss of €4.2bn (£3.8bn) in the first half of the year as passenger numbers collapsed by 98%.
The struggling travel group Tui, Europe’s biggest tour company, which earlier this week revealed it had lost £1.8bn so far this year because of the travel lockdown, fell 4.7%.
The low-cost airline easyJet, which on Friday announced it had made $771m (£608m) from the sale and leaseback of 23 aircraft, tumbled 7%, while Ryanair fell by 4.5%.
“The question now becomes just how long the likes of easyJet, Ryanair and IAG can continue under these conditions,” said Russ Mould, the investment director at AJ Bell. “It appears summer 2020 will be something of a write-off, the industry cannot afford for the same to be true in 12 months.”
Hotel groups have also taken a hit, with Intercontinental down 2.8%, Whitbread down 2.6% and Accor off 2%.
Air France fell by almost 6% in early trading while ADP, which runs Paris’s airports, dropped by 2%. Getlink fell by 2.5%.
Rolls-Royce, which makes engines for the aviation industry, was down 4%. Melrose Industries, whose GKN business makes windows for aircraft, fell by 4.2%. WH Smith, a fixture in airports and railway stations, dropped by more than 4%.
ITV, which recorded the biggest ad slump in its 65-year history in the second quarter, fell 3% as investors fear a second wave of travel sector advertisers freezing budgets.
From 4am on Saturday those arriving in the UK from France will have to quarantine for 14 days or face a fine, throwing hundreds of thousands of holidaymakers’ plans into chaos.
“The move will force a large swathe of cancellations right at the peak of the summer holiday season for one of the largest markets for UK tourists,” said Neil Wilson, the chief markets analyst at Markets.com. “Apart from the immediate damage this will do, the quarantine decision also underlines the inherent risk you take in booking a holiday abroad right now, which will do nothing for consumer confidence.”
