“Worries about plunging confidence amongst the travelling public and concerns about future travel restrictions being imposed due to the spread of the Omicron variant have led to fresh volatility for airline stocks and companies reliant on the industry. Investors have had to buckle up for yet another burst of severe turbulence affecting the sector.
Q3 2021 hedge fund letters, conferences and more
The Airline Industry Asks For Government Assistance
It comes amid reports that British Airways owner International Consolidated Airlns Grp SA (LON:IAG) and Ryanair Holdings plc (LON:RYA) have asked for government assistance to help them through another bleak winter. Shares in both companies fell sharply on Monday with losses accelerating towards the end of the working day after it’s feared new testing requirements will cause severe repercussions in terms of booking rates over the coming months. News that Air France and KLM may seek a fresh capital raise is also weighing on the sector which has pushed Rolls Royce and Melrose lower, given how reliant both companies are on the health of commercial aviation.
There has been further downward pressure on the oil price following the recovery last week, putting pressure on Royal Dutch Shell plc (NYSE:RDS.B) due to concerns the rapid spread of Omicron and reduced effectiveness of vaccines will lead to lower global demand as countries batten down the hatches and wait for a fresh wave of infections to hit. However mining stocks are higher with investors looking to the prospects of better growth in 2022 with the news that Beijing stands prepared to turn on the stimulus taps next year to help with the recovery, by cutting the amount of money it requires banks to hold in reserve as a share of deposits."
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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