Travel firms take off as Britons flock to the Med
TRAVEL company shares took off after a buoyant update from budget airline Easyjet.
Demand for last-minute summer holidays has been so much better than expected that the company has expanded its schedule.
It had been planning to operate at about 30pc of its capacity between July and September.
But it will now bump this up to 40pc, and will be running 1,000 or so flights a day in August.
Some of the most popular destinations have been Nice in the south of France and Faro in Portugal, even though Portugal has not yet been included in any air bridge agreements.
Chief executive Johan Lundgren said customers still have ‘ an underlying desire and willingness to book and travel’, especially to get away on a beach break.
He also said the UK’s swift decision last month to impose a twoweek quarantine on those arriving from Spain hadn’t caused customers to cancel their plans en masse – but said that late bookers were just looking elsewhere at places such as Greece and Croatia.
Unsurprisingly, the fact that it ran a mere 709 flights in the three months to June, compared with 165,656 a year ago, pushed it to a £325m loss.
This was down from a £174m profit in 2019.
But these figures weren’t what the stock market was focused on.
The change in tone about summer holidays, following news rivals were curbing services to Spain and being hammered by the shock quarantine, was exactly what traders wanted to hear.
Easyjet rose 8.8pc, or 44.4p, to 551.6p – and it brought the rest of the sector up too. British Airwaysowner
IAG climbed by 7.1pc, or 11.55p, to 175.4p on the FTSE
100 index, while Tui rocketed 9.1pc, or 26.3p, to 314.2p on the mid-cap index.
The rally helped keep both of London’s top indexes in the black, though only just.
The Footsie rose 0.05pc, or 3.15 points, to 6036, while the FTSE
250 rose 0.9pc, or 149.58 points, to 17307.7.
The blue-chip index also got a boost from GKN-owner Melrose, which managed to thrash out new terms with its banks that it says will give it ‘ considerable headroom and flexibility’.
The company, which makes parts for the hard-hit car making and aerospace sectors, has already scrapped its dividend and says job cuts are inevitable.
But the breathing room sent shares 9.4pc higher, up 8.28p, to 96.5p – and straight to the top of the Footsie leaderboard. Defence contractor Babcock
International had a more difficult start to the week.
The company won’t pay a dividend for the past year after profits took a 40pc knock in its most recent quarter and revenues fell.
It said this was an ‘appropriate’ decision given that it had been tapping into the Government’s coronavirus furlough scheme.
Doing the honourable thing didn’t do much for its shares, though, with its stock falling 9.4pc, or 27.2p, to 261.8p.
Direct Line and Centamin both unveiled better news on dividends. Insurer Direct Line rose 5.3pc, or 16.4p, to 324p after pledging a 7.4p per share half-year payout and a one- off 14.4p divi to replace the annual one that it previously suspended.
It came as the number of motor claims dropped by as much as 70pc at the peak of lockdown.
And gold miner Centamin rose 2.1pc, or 4.3p, to 211.8p, after the coronavirus-driven surge in gold prices so far this year helped push first-half profits from £45.6m last year to £146m.
It increased its divi by 50pc to around 4.6p per share.