Shares on the slide as BA puts 747s out to pasture
BRITISH Airways-owner IAG hit turbulence after the airline said it was scrapping its entire fleet of iconic 747 jumbo jets.
The slump in air travel triggered by coronavirus makes it unlikely the planes will ever fly again, according to BA.
IAG – which also owns Iberia and Aer Lingus – believes it will take until 2023 to get back to 2019 passenger levels.
BA was planning to retire the 31 planes in 2024 and it was one of a handful of airlines still using the 747-400 model, which it began flying in 1989.
The jets struggle to compete with new, leaner, more fuel-efficient planes, and airlines also expect short-haul flights to recover more quickly than longhaul, leaving little demand for them. But ditching the Boeing jets, known as the ‘queen of the skies’ and credited with democratising air travel when they launched in the 1960s, is another sign of how difficult the next few years are going to be. Shares in IAG fell 2.3pc, or 5.2p, to 218.9p.
Over on the mid-cap index, budget airline Easyjet was knocked back by a double whammy of bad news.
Friction between pilots and the company came to a head when the Balpa union revealed more than 2,000 Easyjet pilots said they had no confidence in the company’s operations chief Peter Bellew.
Balpa has criticised the executive for misjudging the pandemic and proposing pilot redundancies at a scale for which they say there was ‘no justification’.
Easyjet has called on the union to ‘focus on working constructively with us rather than on personal attacks which are not in the best interests of our employees’.
Shares fell 3.2pc, or 22.2p, to 663p by the close as tensions also flared up with another key stakeholder, outspoken founder Sir Stelios Haji-Ioannou. He has taken his family’s stake down from marginally below 30pc to 28.7pc.
Until recently they owned more than a third of Easyjet’s shares – but an explosive fall-out over a £4.5bn order for new planes with Airbus caused such deep damage it has led Stelios to sell down.
The FTSE 100 finished 0.6pc higher, up 39.61 points, to 6290.3, while the FTSE 250 finished up 0.2pc, or 26.64 points, at 17347.93.
The blue-chip index was boosted by gains in home improvement specialist Homeserve, which said it saw the largest ever number of web visits to its Checkatrade site last month. In June, 2.67m people went on the Checkatrade site, compared with 1.74m in the same month a year earlier.
It reckons it is in line to benefit from homeowners wanting to do improvements and repairs after having been cooped up during lockdown. Shares rose 3.6pc, or 47p, to 1350p. Hollywood Bowl scored a strike with investors – with shares rising 7.6pc, or 11p, to 156.5p – after announcing it will reopen all of 54 of its centres in England on August 1.
The leisure group will regularly clean bowling balls, will close every other lane and restrict groups to a maximum of six people to both ensure social distancing guidance is met to encourage customers back.
Engineering group Renishaw also rocketed higher on an upbeat update. Its stock surged 10.2pc, or 450p, to 4880p after it raised its annual revenue forecast from between £490m and £505m to £510m. It made the gains despite reporting profits will nosedive from an earlier forecast of up to £41m to just £4m, because of a slew of one-off charges.
Packaging and cigarette filtermaker Essentra stayed flat, at 324.2p, after a United Arab Emirates-based subsidiary agreed to pay a £531,000 fine to US regulators over a scheme to supply North Korea with tobacco products.