UK Airline Stocks off to Flying Start in 2022

January 05, 2022 07:30

Yesterday, the UK markets reopened after remaining closed on Monday in observance of the New Year holiday. All in all, it was a good day for UK stocks, with the main indices overshadowing their US counterparts.

The FTSE 100 climbed 1.63%, reaching its highest level since February 2020, whilst the FTSE 250 closed up by 1.77%.

On Monday, despite thousands of flights being cancelled, US airlines performed strongly in Wall Street’s first session of the year and, yesterday, UK-listed airlines eagerly took up the baton from their industry companions on the other side of the Atlantic.

EasyJet, International Consolidated Airlines Group (IAG) and Wizz Air gained an impressive 9.24%, 11.26% and 12.22% respectively during the first session of 2022.

Why did airline stocks perform so well?

There seems to be increasingly positive signs surrounding the Omicron variant of Covid-19 - namely that, despite being highly infectious, it does not appear to cause as serious illness as previous variants. Largely due to this, investors appear confident that international travel will rebound in 2022.

Due to global travel restrictions, airline stocks have had a particularly tough time since the beginning of the pandemic, with revenue plummeting as international travel ground to a halt in 2020.

IAG, responsible for both British Airways and Iberia, was among the FTSE 100’s worst performers in 2021. In fact, despite its strong performance on Tuesday, IAG’s closing price of 158.52p is still well below its 52-week high of 222.10p and around 75% lower than its pre-pandemic levels.

Will international travel recover significantly in 2022? Many optimistic investors certainly appear to believe so. However, the more cautious will most likely wait for data confirming a turnaround before considering adding airline stocks to their portfolios.

Nevertheless, after UK Prime Minister Boris Johnson’s announcement yesterday that it was unlikely there would be any further restrictions in England due to Omicron, it would not be surprising if British travel stocks posted further gains this week.

Depicted: Admirals MetaTrader 5 – IAG Daily Chart. Date Range: 5 May 2021 – 4 January 2022. Date Captured: 5 January 2022. Past performance is not a reliable indicator of future results.

 

Depicted: Admirals MetaTrader 5 – IAG Weekly Chart. Date Range: 5 July 2015 – 4 January 2022. Date Captured: 5 January 2022. Past performance is not a reliable indicator of future results.

 

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Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s