Jump to content

EZJ, TUI, WIZZ, JET2, and IAG shares in danger as chaos continues


Recommended Posts

easyJet shares are down by 8%, TUI down 22%, Wizz Air down 11%, Jet2 down 9% and IAG shares down 15% in the past month alone.

iagSource: Bloomberg
 
 Charles Archer | Financial Writer, London | Publication date: Thursday 02 June 2022 

Despite boasting that pent-up demand for air travel would come back with a vengeance in 2022, UK airline stocks, whether FTSE 100 or FTSE 250, appear woefully underprepared.

EZJ, TUI, WIZZ, JET2, and IAG shares: travel chaos

It’s not hard to find the stories and photos of disappointed and angry customers in airports across the UK. With thousands of flights cancelled, luggage disappearing, and queues stretching into the horizon, chaos is about as apt a word as any to describe the current situation.

And the source of the disruption is clear. The covid-19 pandemic saw travel demand collapse, forcing airlines to let go of staff while simultaneously taking on mountains of debt.

Industry body Airlines UK estimates that UK airlines cut their workforce from 74,000 people in 2019 to just 44,000 during the pandemic. Thousands more of the 66,000 staff employed by airports and aviation support companies pre-pandemic were axed.

Swissport alone more than halved its 8,500-strong workforce; and while it’s since rehired 2,800 people, 1,200 are still waiting for their security clearance.

With CPI inflation at 9% and 1.3 million job vacancies in the UK, every airline is struggling to hire workers willing to travel to an inconveniently located site for low pay, long hours, and shift work that inevitably involves late nights and weekends.

For example, IAG British Airways is paying a salary ‘in the region’ of £25,500 a year for a full-time Ground Operations Agent. While also offering an additional £1,000 time-locked sign-on bonus, this works out at just over £400 a week, compared to the ONS UK average of £615.

And that’s with no guarantee that their job won’t be axed again if an airline collapses under debt or the pandemic resurges.

Shadow Transport Secretary Louise Haigh has called on the government to address multiple problems including the ‘chronic low pay.’ However, the industry is in a catch-22. Already facing increased costs, pay rises will need to be tacked onto flight tickets. And consumers are firefighting the cost-of-living crisis as well.

But Unite is already balloting BA’s 700 check-in staff to reverse a 10% pay cut imposed during the pandemic. The ballot closes on 27 June, and a vote in favour would cause even further disruption at the peak of the summer season.

easyjetSource: Bloomberg

Training challenges

Training new staff cannot start until new hires gain security clearance from the Civil Aviation Authority and the government. This is reportedly taking far longer than in the past.

Former IAG CEO Willie Walsh, who now works as director-general of the International Air Transport Association, recently warned ‘you can’t start the training until you’ve got the security clearance. You offer them a job, they accept it, and then you have to go through this period of three months to get security clearance – they’re not gong to hang around. They’ll go and find a job somewhere else.’

To help solve the crisis, the government changed the vetting rules at the end of April so that they can be partially trained while waiting for their clearance. Moreover, the Cabinet Office told BBC News ‘there are absolutely no delays to security vetting of applicants. It is wrong to suggest otherwise, and we are prioritising vetting applications from the aviation industry.’

Meanwhile, Transport Secretary Grant Shapps has argued that ‘operators seriously oversold flights and holidays relative to their capacity to deliver. This must not happen again and all efforts should be directed at there being no repeat of this over the summer.’

Jet2 CEO Steve Heapy thinks ‘Brexit has taken hundreds of thousands, if not millions of people out of the employment market and that undoubtedly is having an impact.’ However, the government has ruled out changes to the Shortage Occupation List to allow EU workers to fill the gap.

And the Passport Office has reported that 5 million people delayed their passport applications during the pandemic amid worsening wait times. UK airline stocks could be hit with even higher demand in a few weeks, just as staff threaten to strike amid a training and recruitment crisis.

Moreover, most airlines don’t expect to be running at pre-pandemic capacity levels this quarter. Just 4.2 million people went through Heathrow in March 2022, compared to the 5.4 million seen in February 2020 before the pandemic began.

easyJet, TUI, Wizz Air, Jet2, and IAG shares are trading on optimism for a summer boom. But time is not on their side.

Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.

* Best trading platform as awarded at the ADVFN International Financial Awards 2021

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      19,986
    • Total Posts
      87,944
    • Total Members
      69,127
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Elza
    Joined 24/09/22 16:18
  • Posts

    • Hey @pravid17 I hope you're well.  In the leveraged trading industry there are brokers who don't hedge client's exposure and brokers (like ourselves) who do hedge client's exposure.  In a perfect world the exposure of short clients would net off the trades of long clients however this is not always the case. Our hedging model allows us to take an exposure in the underlying market for the remaining exposure which doesn't offset - This way we don't need to hedge every trade, worry about profits of our clients and results in lower costs for hedging in the underlying market (commissions, interest etc.). So say 60% of IG customer exposure in the ASX was long and 40% of exposure on the ASX was short. The 40% would net each other off but there's a remaining 20% of customers who need to be hedged to cover their positions. We go into the market and hedge this.  We make our money primarily through our spreads and overnight funding  with other fees making up a small proportion of our revenue. I would like to remind also that IG is regulated by several bodies globally, including top-tier regulators like the UK's FCA, Germany's BaFIN, Australia's ASIC - This should be quite reassuring from a dealing execution and transparency perspective.  I hope this helps, let me know if you have any other question 
    • A survey from Reviews.org, which featured 1000 Americans, found that as many as 1 in 4 US subscribers may quit the service in the next year.    Jeremy Naylor | Writer, London | Publication date: Friday 23 September 2022  There was an interesting breakdown, but the main reason was affordability. Only 18% said they would move to a cheaper competitor. IGTV’s Jeremy Naylor looks at the numbers. Netflix subscription woes Netflix Inc (All Sessions) could be in for a rough time ahead over the next 12 months if a new survey is anything to go by, which was conducted in the US. Out of the 1,000 adults that took part in this survey undertaken by Reviews.org, around 25% of those that were covered said that they would be cancelling their Netflix subscription within the next 12 months. Now, it says with that 25% of US subscribers to Netflix considering leaving, not to join a competitor, but mostly because of pressures on household bills. This is how it is split: rising cost of subscriptions - 40% inflation - 20% a lack of content - 22% spending more time on the services of others - 18% So you can see, a minority said they were going to other services, such as those provided by Disney Plus or Amazon Prime. The cost of Netflix has risen dramatically this year as its basic plan increased by 11% in January and its other plans by 20% to 25%. Now these were the first price increases for three years, so that itself is relatively new for a lot of subscribers. Netflix share price Let's take a look at the Netflix share price. You can see on the far left hand side of this chart the COVID lows at $290.39. We saw a whacking great increase there of 141% to the top and the record high in Netflix shares back in November 2021. And that was when subscriptions were rising, people were paying more for their services, and it was all humming beautifully. And then all of a sudden people started questioning the numbers of streaming services they were undertaking with some deciding to withdraw from Netflix. All of a sudden the big drops started coming through with profit warnings and sales warnings. We've recently hit a new low of $162.50. Since then there has been a little bit of an increase. We're currently trading at $232.75, but we are down by a margin of 1.75% in today's session, which reflects this news that we could well see a relatively large drop in subscribers for Netflix in the US within the next 12 months.
    • Market data to trade the week of 26 September: Nasdaq; NXT From the economic calendar next week IG technical analyst, Axel Rudolph, picks up on a short trade on the Nasdaq around US inflation data. Meanwhile, despite another light week of corporate data, Axel picks out the chart of Next plc (NXT) as an interesting trade to think about.          
×
×
  • Create New...