Airline stocks have tumbled after the UK government imposed quarantine rules on people arriving from France, Netherlands, Monaco, Malta, Turks and Caicos, and Aruba.

Around 160,000 British holidaymakers currently in France have until 4am tomorrow morning to get back home if they wish to avoid having to quarantine for 14 days upon their return.

It comes after France’s prime minister admitted the country’s coronavirus infection numbers were going ‘the wrong way’, while France also warned it would take ‘reciprocal measures’ on people arriving from the UK.

British Airways owner International Consolidated Airlines (IAG) was the biggest faller in the FTSE 100, with its shares dropping 6.4% to 191p, while in the FTSE 250 budget airline EasyJet (EZJ) fell 7.2% to 566p and tour operator TUI (TUI) dropped 5.7% to 325p, having already fallen significantly yesterday.

Though EasyJet’s share price fall also comes after it completed a sale and leaseback programme for 23 aircraft, in a sign of how much uncertainty there is in the aviation industry at the moment.

The sale and leaseback generated a total of £608 million, towards the upper end of EasyJet’s previously guided range of £500-650 million.

Ryanair (RYA) shares dropped 4.6% to €11.54 on the news with fellow budget airline Wizz Air (WIZZ), which is more focused on Central and Eastern Europe, down just 2% to £35.72. Jet2 owner Dart Group (DTG:AIM) was also a sizeable faller, with its shares down 6.3% to 689p.

‘SUMMER 2020 A WRITE OFF’

AJ Bell investment director Russ Mould said, ‘The problem for the airlines is that people’s desire for a break in the sun may be outweighed by their fear of the logistical challenges of holing up for two weeks when they get back, with decisions on which countries to add to the quarantine list often coming at short notice.

‘This decision will feel particularly painful as it comes at the height of the UK holiday season and the question now becomes just how long the likes of EasyJet, Ryanair and British Airways-owner International Consolidated Airlines can continue under these conditions.

‘It appears summer 2020 will be something of a write off, the industry cannot afford for the same to be true in 12 months.

‘And yet until there is a vaccine, the recovery from the coronavirus is likely to be patchy with the risk of travel restrictions between countries when there are localised flare ups.’

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Issue Date: 14 Aug 2020