IAG shares were heavily hit on Friday after African counties confirmed the discovery of a new variant of coronavirus that was called the ‘most significant’ yet.
The new variant is said to have over 50 mutations which are yet to be fully understood and presents a huge challenge to the global travel industry that was only just starting to get back on its feet with higher passenger number and the reopening of routes including the Transatlantic route.
The UK government moved quickly to restrict travel and impose measures on those travelling from certain African countries.
The IAG share price was down as much as 20% in early trade on Friday, before recovering to be down 11%.
The selling was evident across the travel industry and those companies associated with travel, for example Rolls Royce traded at the lowest level since September.
“The decision by the UK government to impose stringent quarantine rules on six southern African countries within hours has severely rattled the travel and tourism industry. It’s set off a fresh bout of extreme turbulence for the travel sector,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“British Airways owner IAG nosedived 16% in early trade with investors deeply disturbed that demand for long haul transatlantic flights could be badly affected. Rolls Royce followed the descent, plunging by 11%, as the development could prove another major upset for its core business of making and servicing engines for long-haul aircraft. easyJet, Ryanair, TUI and Wizz Air also plummeted in early trading, registering much sharper falls than earlier drops of Quantas on Australia’s ASX which fell 5.5%, and Hong Kong listed Cathay Pacific which was 4.1% lower.”
IAG shares
Investors in IAG shares have been devastated by the drop today as the IAG share price now trades at the lowest levels of 2021, having given up most the gains made during the recovery from initial selling last February.
The selling today adds to pressure earlier in the week caused by rising infections in Europe that was leading to lockdowns and ultimately reduced travel over the festive period.
IAG shares were trading at 137p, shortly before 10.00am in London.
