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Airlines flying higher as Omicron data continues to point to milder illness

© Reuters.

By Samuel Indyk – UK-based airlines were all trading with strong gains on the first trading day of the year as the latest data on the Omicron COVID variant continues to point towards a less severe illness than previous strains.

Although infections levels have risen to unprecedented levels – the US reported a record 1 million daily cases on Monday – the severity of illness is lower, suggesting that global restrictions similar to early on in the pandemic will not be necessary.

Shares in British Airways parent IAG (LON:ICAG), and low-cost carriers EasyJet (LON:EZJ) and Wizz Air (LON:WIZZ) were trading higher by between 6%-10% on Tuesday morning.

Cruise line operator Carnival PLC (LON:CCL) (NYSE:CCL) was trading with gains of over 8% and tour operator Tui (LON:TUIT) was higher by over 6%. Jet engine manufacturer Rolls-Royce (LON:RR) was trading higher by 3.7%.

“There is clearly expectation that bookings will have got a rocket boost from hopes that this latest spike of infection will flatten relatively quickly,” said Hargreaves Lansdown (LON:HRGV) Senior Investment and Markets Analyst Susannah Streeter. “With so many people in the short-term being forced to isolate at home, it’s likely many people will be spending the next few weeks browsing travel blogs for inspiration, given there is so much desperation for a holiday around.”

Flight cancellations

The rally in share prices of companies in the travel industry comes as flight operators continue to cancel flights, with over 4,000 flights cancelled around the world on Sunday, partly due to the spread of Omicron.

A high number of infections amongst airline staff has meant that pilots and cabin crew have had to quarantine and COVID staff shortages have meant flights have not been able to get off the ground.

And although the cancellations may create a near-term risk for airline stocks, the focus remains on the long-term picture. A less severe COVID variant, high vaccination rates (including boosters), and the new antiviral treatments from companies such as Merck (NYSE:MRK) and Pfizer (NYSE:PFE) should mean that the disruption to international travel remains minimal this time. 

Wizz Air traffic figures

Further supporting the airline industry on Tuesday morning was news that Wizz Air had flown 2.638 million passengers in December, a near 3-fold increase from the same period last year. The number of passengers carried also increased from November’s 2.172 million.

The load factor increased 19.3 percentage points from the same period of last year to 75.4%.

In an update on Tuesday, the company added that it had acquired 15 daily slot pairs from Norwegian Air Shuttle at Gatwick Airport.

Airlines flying higher as Omicron data continues to point to milder illness

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