How Will The “Green List” Decision Impact Travel Stocks?
Aside from the obvious nightmare that holidaymakers who were sunning themselves in Portugal experienced when the UK government did a U-turn and decided that it was no longer safe to travel to this country, the implications for travel stocks could be huge.
The fact that the government removed Portugal from its so-called green list, which is a tiny list of destinations that do not require you to self-isolate if you return from a holiday there, the decision to switch Portugal from green to amber has prompted a predictable scramble.
Widespread Drop In Prices
Not surprisingly, the swiftness of the government’s decision and the universal shock and disappointment from everyone from tourists to financial traders that greeted the decision saw stocks in the travel sector tumble.
Whether you are looking to trade stocks from IAG (British Airways), budget airlines like Ryanair and EasyJet, or travel companies such as TUI, tour operators and airlines dropped more than £2bn in value as a result of Portugal being removed from the green list.
More Clarity Required
There has been almost universal condemnation of the decision from companies in this sector, with TUI saying that removing Portugal from the green list caused “untold damage” to confidence and holidaymakers’ willingness to book.
Ryanair shed 4.5% in response to the news. That is not surprising when you consider that they had just lost one of their primary sources of revenue from holidaymakers.
The carnage caused by removing Portugal from the green list obviously had wider implications for the tourism industry. It had been hoped that the sector would enjoy a recovery in bookings once that country had set the trend of being open for business.
The travel sector will be very interesting to watch over the coming weeks and any signs of a late summer revival in fortunes with vaccination rollouts offering some hope could see stocks respond to good news.
Alternatively, with aircraft fleets spending a lot of time in their hangar rather than in the skies, the amount of cash reserves airline companies will eat through can only intensify their problems.
It is going to be interesting to see how much of that £2bn is recovered across travel stocks.