Tourism shares fly after travel talk boosts hopes
TALK of freer transatlantic travel between Europe and the US boosted British Airways- owner IAG and ailing plane engine maker Rolls-Royce.
The FTSE 100 groups and a host of other tourism stocks rose after Ursula von der Leyen, president of the European Commission, said on Sunday that Americans who have been vaccinated against Covid should be able to travel to Europe by the summer.
This was a surprise to some, who may have thought this was too early given that the EU’s own vaccine programme is lagging behind that of the US and the UK.
But London-listed firms were given an extra boost after BA boss Sean Doyle said there was a ‘great opportunity’ for Britain and America to set up a transatlantic travel corridor, given the strength of both immunisation programmes.
BA would be one of the main beneficiaries of freer movement between the two nations as it is one of the key carriers on the London to New York route – the most lucrative in the world. Rolls would also stand to make big gains as it makes engines for large aircraft that fly long-haul routes.
It is paid for the number of hours its engines fly and will miss out on much of the boom in short-haul European travel this summer.
This will restart for Britons from May 17, though details such as a ‘traffic light’ system have yet to be firmed up. IAG rose 4.2pc, or 8.26p, to 205p, while Rolls added 6pc, or 6.06p, to 107.82p, and even Europe-focused Easyjet climbed 4.3pc, or 42.1p, to 1028.5p.
The rally among travel stocks nudged the FTSE 100 higher by 0.4pc, or 24.56 points, to 6963.12, while the FTSE 250 rose 0.9pc, or 205.08 points, to 22577.34. Engineering group IMI started the week with a bang and rose to the top of the mid-cap leaderboard after it told investors it would smash profit estimates. The heating and cooling system- designer jumped 11.1pc, or 155p, to 1552p, after it said trading was strong in all its major markets and it had sped up a cost-cutting programme that will help it save £22m this year.
It also launched a £200m share buyback programme – which will pay investors to buy their stock.
IMI’s scheme takes the total value of share buybacks announced in the UK this year to more than £4bn, according to AJ Bell’s investment director Russ Mould.
A majority of Aggreko shareholders gave the all- clear to a £2.3bn takeover by TDR Capital and I Squared Capital.
The FTSE 250 firm – which provides portable power generators and air conditioning units to everything from mines to Glastonbury Festival and the Olympics – has become the latest in a string of London-listed companies to be snapped up by private equity firms. Aggreko’s bosses backed the 880p per share offer last month. Shares rose 1.1pc, or 9p, to 862p after the vote cleared last night.
Elsewhere, You Gov and Unilever were conducting takeovers of their own.
Pollster You Gov acquired a finance start-up called Lean App for an undisclosed sum.
The deal will give You Gov access to a slew of financial data its clients can use to understand consumer behaviour. Its stock closed up 3pc, or 30p, to 1045p.
And Unilever (down 0.7pc, or 27.5p, to 4086p) made another move into the lucrative health and nutrition market, buying US-based food supplement group Onnit. It will join Unilever’s vast stable of brands, which includes Cif, Ben & Jerry’s and Dove.
Food ingredients maker Tate & Lyle was also on a health push, rising 5.9pc, or 44.8p, to 801.8p, after confirming a break up is on the cards. It is mulling the possibility of selling a controlling stake in its sweeteners division, which makes high-fructose corn syrups.