Airline stocks remain in tailspin despite fundraising efforts

Airline stocks have continued to fall amid fears of a second wave of Covid-19 and despite some big carriers attracting financial backing.
Airline stocks remain in tailspin despite fundraising efforts
Airlines are hoping Britain agrees travel deals with other countries to allow restriction-free movement between some European countries. Picture: Steve Parsons/PA Wire
Airlines are hoping Britain agrees travel deals with other countries to allow restriction-free movement between some European countries. Picture: Steve Parsons/PA Wire

Airline stocks have continued to fall amid fears of a second wave of Covid-19 and despite some big carriers attracting financial backing.

Ryanair, already down by nearly 11% since the beginning of June, slipped 2.3%; while Aer Lingus and British Airways owner IAG – down 31% in June and 60% since the start of the year – shed over 1.4% of its value.

Ryanair’s British rival EasyJet fell by almost 10% despite it raising approximately £419 (€463m) to bolster its finances amid the Covid-19 devastation.

The new equity will help boost its liquidity to about £3bn, EasyJet said, enabling it to survive for many more months even if planes are grounded again, and putting it in a strong position to cope with “protracted recovery scenarios”.

EasyJet’s planes returned to the air this month, but with minimal service.

It said it would resume flights to Paris, Barcelona and Milan from Britain from July 1, as it restarts services from Manchester and London’s Luton Airport.

The airline is hoping to ramp up flying as the year goes on, but demand is being hampered by UK quarantine rules and consumer nervousness.

Airlines are hoping Britain agrees travel deals with other countries to allow restriction-free movement between some European countries.

A review of its quarantine rules is due next Monday.

Airline group A4E has urged European regulators to extend temporary airport slot cost waivers to allow carriers cope with unpredictable passenger demand.

Annual airline losses are projected to total €82bn, globally, this year – the worst year in aviation’s financial history.

Europe’s airlines are projected to lose €19bn.

EasyJet has said it does not expect passenger demand to recover to pre-pandemic levels until 2023 and is planning to axe up to 4,500 jobs.

British Airways, owned by IAG, has said it needs to shed 12,000 jobs and there has been media speculation that IAG could also raise new equity.

Qatar Airways, IAG’s biggest shareholder, has said it would inject equity into IAG if needed.

However, Lufthansa shares jumped over 7% - having surged as much as 20% earlier - after its top shareholder dropped his objections to its €9bn German government bailout.

The endorsement of billionaire investor Heinz Hermann Thiele – who recently increased his Lufthansa stake to 15.5% - amounts to an 11th-hour reprieve for Germany’s flagship airline after fears had swirled he might veto the proposed rescue, which will see the government take a 20% stake and board seats, diluting existing shareholdings.

Elsewhere, Australian airline Qantas is to axe at least 20% of its workforce - or 6,000 jobs - and intends to raise up to $1.3bn of equity under a sweeping cost-saving plan prompted by the Covid-19 crisis.

-additional reporting Reuters

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