Blistering temperatures in Europe and evacuations from the islands of Rhodes and Corfu, as holidaymakers flee a series of raging wildfires, are set to force extra costs on airlines and travel operators and have put a question mark next to their near-term earnings forecasts.
To make matters worse from an investment point of view, Ryanair warned that the tough economic backdrop “might affect consumer spending in the second half of the year”. Investors in London, fearing they might get their fingers burnt if they did nothing, responded with a sell-off in travel stocks.
International Consolidated Airlines Group, the owner of British Airways and the biggest player in the sector, fell by 2¾p, or 1.7 per cent, to 153p. Wizz Air lost 171p, or 6.4 per cent, to £24.96; Tui declined by 21½p, or 3.5 per cent, to 587½p; easyJet fell 21p, or 4.4 per cent, lower to 455½p; and Jet2 descended 49p, or 4.1 per cent, to £11.45.
There wasn’t much comfort to be found in a bit of luxury retail, either. Burberry shares were offloaded after a broker advised investors to explore “better opportunities” elsewhere in the sector. The purveyor of trench coats and check designs has continued to lag its European rivals, including LVMH, which in April became the first company in Europe to hit a $500 billion market value.
While Burberry is repositioning itself with a more British-focused aesthetic under Daniel Lee, its new creative director, Carole Madjo, the head of European luxury goods research at Barclays, said she remained cautious and felt the “key test” would be how Lee’s collections were received once they went on sale.