Airline shares tumble as new Covid variant triggers travel restrictions

Airline shares tumbled on Friday after the UK introduced restrictions on travel from southern African countries and the EU said it was likely to do the same to try to stop the spread of a new coronavirus variant.

International Airlines Group, which owns British Airways, fell as much as 20 per cent in early trading, while easyJet dropped 17 per cent and Lufthansa 12 per cent.

The sell-off also rippled out across the wider travel industry. Shares in French hotel group Accor fell 8 per cent and InterContinental Hotels Group were down 7 per cent. Cruise operator Carnival fell almost 12 per cent in early trading and aircraft manufacturer Airbus lost more than 9 per cent.

The UK late on Thursday placed six countries — South Africa, Botswana, Namibia, Zimbabwe, Lesotho and Eswatini — on its travel red list, while the European Commission on Friday said it would propose to ban travellers from the region.

Japan, Italy, Germany, Singapore and India have also tightened controls on travellers coming from the six countries, Reuters reported.

Scientists are increasingly worried about a surge in cases caused by the heavily mutated B.1.1.529 variant of the Sars-Cov-2 virus, fearing it is more transmissible and better at evading vaccines than the dominant Delta variant.

Grant Shapps, UK transport secretary, told Sky News: “As scientists have described, [this is] the most significant variant they’ve encountered to date.”

Airlines and other travel shares had already been under pressure this month after several European governments introduced new local lockdowns following a wave of infections caused by the Delta variant.

But the prospect of a return to widespread restrictions on international travel creates new concerns for a sector that had started to recover over the past six months.

Share prices of companies that have done well from the pandemic, including online supermarket Ocado, board game company Games Workshop and food delivery services Just Eat and Hello Fresh, reacted positively to the news on Friday, with rises of between 1 and 3 per cent.

Southern Africa is a small part of European airline networks: BA had been flying two daily flights to South Africa, and Virgin Atlantic one.

Mark Simpson, an aviation analyst at Goodbody, said the reaction “highlights the fragility of the situation” for the industry.

Additional reporting by Ian Johnston

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