More than £3bn was wiped off the value of UK airlines and travel-related companies on Friday as Austria’s decision to order a national lockdown stoked fears of the introduction of new pandemic restrictions across Europe.
Austria will go into its third national lockdown from Monday, which could last until 12 December, in an attempt to arrest a surge in coronavirus cases and rising deaths.
The potential for restrictive measures to be introduced in other European countries – there is a similar Covid resurgence in Germany – led to a sharp sell of UK-listed companies in the travel sector.
IAG, the owner of British Airways, was down almost 6% on Friday afternoon, wiping more than £400m off the company’s market capitalisation.
IAG, which also owns the airline Iberia, is at a two-month low as investors wiped out the gains seen when transatlantic travel to the US resumed last week.
The biggest faller on the FTSE 100 was Rolls-Royce, down almost 6%, while the Premier Inn owner, Whitbread, which also operates in Germany, Intercontinental Hotels group and the events business Informa were all among the biggest fallers.
“Surging case numbers [in Austria] have far surpassed last year’s peak,” said Craig Erlam, a senior market analyst at the trading company Oanda. “While fatalities remain well below the peak, they are accelerating and the government is clearly keen to arrest it before the situation potentially becomes much worse. With Germany seeing a similar trend, the question now becomes whether the region’s largest economy will follow the same path.”
Businesses affected by negative investor sentiment on Friday also included the airlines easyJet, Ryanair, Lufthansa and Wizz Air as well as the package holiday firm Tui. Shares in SSP, which runs the Caffè Ritazza and Upper Crust chains at transport hubs, and Restaurant Group, which runs chains including Wagamama and Frankie & Benny’s, also took a hit. National Express and WH Smith, which operates in airports and train stations, also suffered share price falls.
Jens Spahn, Germany’s health minister, said on Friday that the country was “facing a national emergency” and did not rule out a similar national lockdown. “We’re in a situation where we can’t rule anything out,” he said.
On Thursday, the head of Germany’s disease control agency said that the country was heading for a “very bad Christmas” if drastic measures were not taken to curb the spread of the coronavirus.
Erlam said: “The situation is not quite so severe in other countries like France, Italy and Spain but that could change in the coming weeks, as we saw around the same time last year. High vaccination rates mean the link between case numbers and fatalities is far lower but the former is rising at a remarkable rate, which is clearly making it very hard to ignore.”