IAG, easyJet erase gains despite positive travel developments
Stock prices of both airlines experienced a sharp correction on Wednesday, after having rallied strongly at the start of the week on the easing of quarantine requirements for travellers.
- IAG (LON: IAG) share price falls over 3% to an intraday low of £180.60 on Wednesday (07 July 2021)
- easyJet PLC also lowered 3.4% to £903
- Both stocks rallied over 5% earlier this week, after the UK government announced plans to remove quarantine requirements for double-jabbed passengers entering the UK from ‘amber list countries’
- IAG-owned British Airways, Virgin Atlantic and Heathrow Airport then announced that they will participate in a ‘proving trial’ that will allow inbound travellers to prove their vaccination status digitally
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Airlines' stock prices: What’s the latest?
Shares of IAG and easyJet have nearly erased all the gains made since the start of the week, after UK Prime Minister Boris Johnson confirmed that fully vaccinated travellers will not have to quarantine upon returning from amber list countries.
On Monday (05 July), Johnson said during a press conference that while the government was working toward easing travel measures, an amber list of countries most impacted by the pandemic will remain in effect.
However, with vaccine efficacies more certain based on recent studies, authorities ‘will work with the travel industry towards removing the need for fully vaccinated arrivals to isolate on return from an amber country’, he added.
This means that residents travelling to popular destinations like Spain, France and Italy will not have to self-isolate at home for ten days upon returning.
British Airways, Virgin Atlantic and Heathrow start ‘proving trial’
Following that, IAG-owned British Airways, alongside Virgin Atlantic and Heathrow Airport on Wednesday announced that they will participate in a ‘proving trial’ to prove that it is ‘possible to quickly and easily verify those arriving into the UK who are fully vaccinated’.
This will be done via an identification process already in place for outbound travel to several countries using various internationally recognised vaccination digital credentials, including the NHS app, CDC card, US state-level digital certification and EU Digital Covid Credential.
The first run of the initiative will involve fully vaccinated inbound volunteers travelling on selected flights from Athens, Los Angeles, Montego Bay and New York to London Heathrow.
‘The trial aims to reassure (the) government that airlines and airports can check vaccine status upstream and away from the border, ensuring no further pressure in UK immigration halls,’ the three companies said in a press release.
In related news, Germany on Tuesday became the latest country to confirm that it would accept fully vaccinated UK travellers without having to be quarantined.
How do analysts view IAG and easyJet?
Despite the string of positive developments, IAG and easyJet’s share prices were unable to sustain their upward momentum, with both stocks declining nearly 3% respectively on Wednesday.
The latest analyst sentiments published by MarketBeat show a consensus rating of ‘buy’ and price target of £222.31 on the IAG stock. The price target represents a 22.5% upside potential from the counter’s last traded price of £181.42.
Credit Suisse analysts, who posted an investment thesis earlier in the day, raised their price target to a more bullish £256 from £228 previously, while keeping a ‘buy’ call on the IAG stock.
Meanwhile, of the 17 analysts polled regarding easyJet, 8 have rated it a ‘hold’ with 7 calling it a ‘buy’ and 2 on ‘sell’. Despite the mixed sentiments, the stock still has a consensus price target of £964.31, which equates to a 7% upside potential from its current price of £902.80.
UBS Group, the latest to rate the stock, has set a price target of £1,125 on easyJet shares.
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