Ryanair leads travel stock surge as holiday hotspots prepare to reopen

Travel stocks – including Ryanair and Aer Lingus-owner IAG – surged as summer getaway hopes resurfaced on the back of a number of European countries relaxing their travel restrictions and destinations saying they’re open for holidays.

Spain has joined the likes of Italy, Portugal, Greece and Cyprus in removing visitor restrictions and planning to reopen hotels and beaches for the July-August peak family holiday season.

Ryanair trumpeted the news by effectively lighting the blue touch paper on a new fare war and saw its share price jump by nearly 12%. Rival EasyJet was up 19%, Aer Lingus owner IAG jumped 22%, tour operator TUI surged more than 30% and shares in German airline Lufthansa rose nearly 7%.

The German carrier is hoping the European Commission will swiftly approve its agreed €9bn bailout from the German government, but Ryanair said it will appeal the funding move.

Ryanair’s group CEO Michael O’Leary said the “illegal state aid” will allow Lufthansa to “engage in below-cost selling” and “distort” competition in the European airline market.

Lufthansa said about a third of head office staff at its Eurowings low-cost subsidiary will need to go as part of overall efforts to return the entire group to profitability.

Industry group the International Air Transport Association – or IATA – has warned of a near 30% surge in overall airline debt this year, which it said could “weigh down” airline recovery.

It said the airline industry’s global debt could rise to $550bn (€505bn) by the end of 2020; $120bn more than where debt levels stood at the beginning of this year.

It said nearly $70bn of the new debt would be made up of government loans, deferred taxes and loan guarantees; with the remainder comprised of commercial loans, capital market debt, debt from new operating leases and accessing existing credit facilities.

“Government aid is helping to keep the industry afloat. The next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating,” said Alexandre de Juniac, IATA’s director general and CEO.

In total governments have committed to $123bn in financial aid to airlines. Of this, $67bn will need to be repaid, IATA said.

“Over half the relief provided by governments creates new liabilities. Less than 10% will add to airline equity. It changes the financial picture of the industry completely. Paying off the debt owed governments and private lenders will mean that the crisis will last a lot longer than the time it takes for passenger demand to recover,” said Mr de Juniac.

Meanwhile, EasyJet has said its chief financial officer Andrew Findlay plans to leave the company next year. The British airline made the announcement just days after Mr Findlay, and other board members, survived an attempt by the airline’s founder Stelios Haji-Ioannou to oust him.

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