Shares in UK and French travel, hotel, and airline companies have taken a hammering after the government’s decision to take France off the safe-country list and impose a two-week quarantine on travellers.
With France, the second-most-popular destination for British travellers – joining Spain, the most popular – on the UK government’s quarantine list, rattled investors sent shares tumbling across a broad range of companies with any involvement in the travel and hospitality sectors.
The widespread sell-off in shares, which included the airport shop owner WH Smith, the jet engine maker Rolls-Royce and the Eurotunnel operator, Getlink, helped drive the FTSE 100 down 2.1% and the Europe-wide Stoxx 600 index down 1.9% by late morning on Friday. France’s leading bourse, the Cac, slumped 2.4%.
IAG, which owns British Airways, tumbled more than 6% in early trading, making it the biggest faller in the FTSE 100. It is the latest blow for the company, which is in the process of cutting 12,000 staff after reporting a record loss of €4.2bn (£3.8bn) in the first half of the year as passenger numbers collapsed by 98%.
The struggling travel group Tui, Europe’s biggest tour company, which earlier this week revealed it had lost £1.8bn so far this year because of the travel lockdown, fell 4.7%.
The low-cost airline easyJet, which on Friday announced it had made $771m (£608m) from the sale and leaseback of 23 aircraft, tumbled 7%, while Ryanair fell by 4.5%.
“The question now becomes just how long the likes of easyJet, Ryanair and IAG can continue under these conditions,” said Russ Mould, the investment director at AJ Bell. “It appears summer 2020 will be something of a write-off, the industry cannot afford for the same to be true in 12 months.”
Hotel groups have also taken a hit, with Intercontinental down 2.8%, Whitbread down 2.6% and Accor off 2%.
Air France fell by almost 6% in early trading while ADP, which runs Paris’s airports, dropped by 2%. Getlink fell by 2.5%.
Rolls-Royce, which makes engines for the aviation industry, was down 4%. Melrose Industries, whose GKN business makes windows for aircraft, fell by 4.2%. WH Smith, a fixture in airports and railway stations, dropped by more than 4%.
ITV, which recorded the biggest ad slump in its 65-year history in the second quarter, fell 3% as investors fear a second wave of travel sector advertisers freezing budgets.
From 4am on Saturday those arriving in the UK from France will have to quarantine for 14 days or face a fine, throwing hundreds of thousands of holidaymakers’ plans into chaos.
“The move will force a large swathe of cancellations right at the peak of the summer holiday season for one of the largest markets for UK tourists,” said Neil Wilson, the chief markets analyst at Markets.com. “Apart from the immediate damage this will do, the quarantine decision also underlines the inherent risk you take in booking a holiday abroad right now, which will do nothing for consumer confidence.”
Only one in 10 adults said they were likely to travel abroad knowing they would have to self-isolate when they returned, according to the latest survey by the Office for National Statistics. The possibility of having to self-quarantine has led 20% of the public to cancel their travel plans, while 14% have opted for a staycation instead of travelling abroad.
The move to remove France from the safe-travel list follows a record post-lockdown number of new coronavirus cases reported by the country of 2,669 on Thursday. Clément Beaune, the French junior minister for European affairs, suggested that France would reciprocate the UK’s move.
Spain, the UK’s favourite tourist destination, was removed from the safe-corridor list on 26 July.