UK holiday bookings went through the roof following an announcement on the upcoming easing of lockdown restrictions.
According to the research data analyzed and published by Finaria, bookings on EasyJet flights from Britain rose by 337% week-on-week following the government announcement. Moreover, summer holiday package bookings soared by an astounding 630% compared to the previous week.
Among the top holiday destinations were Palma, Alicante and Malaga in Spain. Others included the Greek Island of Crete and Faro in Portugal. Most of the holiday bookings fell in August while July was the second most popular month followed by September.
For the world’s top holiday company Tui, bookings shot up by 500% week-on-week. Greece, Turkey and Spain were its most popular destinations. The majority of bookings on Tui were slated for July onwards.
Airline and holiday group Jet2 reported an increase of 600% in bookings during the same period. Thomas Cook, on the other hand, reported a 75% upsurge in website traffic with customers making bookings well into 2022. Though Ryanair did not provide any numbers, it was among airlines reporting a surge in flight bookings.
As a result of the increased interest in the sector, there was a significant jump in airline and travel company stocks. On the FTSE 200, Tui and EasyJet were up by 3% and 7% respectively. International Airlines Group, British Airways’ owner rose by 3.5% on the FTSE 100.
The UK’s ban on international travel is set to be lifted on May 17, 2021 at the earliest. A travel taskforce is expected to announce plans for the resumption of international travel on April 12, 2021.
Tui to Return to Profitability in 2022 with €371 Million in Annual Profit
During its fiscal year 2021 (FY2021) Q1 earnings results announced in February 2021, Tui reported a €699 million quarterly loss. Comparatively, it had posted a €147 million loss in Q4 2019. It attributed the latest quarter’s losses to widespread lockdowns and travel restrictions.
Revenue for 2021 was €468.1 million, lower by 87.8% from the previous year’s €3.85 billion. When the group announced its annual results in December 2020, revenue was down by 58% year-over-year (YoY). According to Statista, the figure plummeted from €18.9 billion in FY19 to €7.9 billion in FY20. Its annual loss was over €3 billion.
For summer 2021, the Germany-based company already had 2.8 million bookings at the time it announced its FY21 Q1 results. That was equivalent to 56% of the total bookings recorded during summer 2019. However, average prices are 20% higher and capacity for summer 2021 remains at 80% of the norm. Prior to the pandemic, Tui took an average of 23 million people on average every year.
At the end of 2019, the company had a market capitalization of £5.4 billion. By mid-February 2021, it had fallen to £2 billion.
Between mid-November 2020 and mid-February 2021, Tui’s share price surged by 42%. At the end of that period, it was trading at about £330, a third of pre-pandemic price. As of March 4, 2021, it had a £4.8 billion market cap and its shares were trading at £359.6, up by 24.69% year-to-date (YTD) according to Marketwatch.
Based on City analysts’ projections, however, the company will return to profitability in 2022 at the earliest if trading conditions become favorable in 2021. Its profit for the year is estimated to be €371 million. To reach that target, it would have to generate €17 billion in sales.
EasyJet Raises €1.2 Billion from Oversold Seven-Year Bond Sale
EasyJet had a similarly rocky 2020, reporting a 52.9% YoY decline in revenue. For the period, which ended on September 30, 2020, its annual revenue amounted to £3 billion compared to £6.4 billion in 2019.
For the full fiscal year, its passenger numbers also plummeted by 50% with capacity sinking by 45.7% YoY. Its outlook for Q1 FY21 was not very optimistic seeing as it was only going to fly at 20% of planned capacity.
On the bright side, the company expected to benefit from pent-up demand during the recovery phase. To illustrate the potential, it announced an upsurge of 876% in sales over a five-day period in October 2020 when mandatory quarantine was removed for visitors from the Canary Islands.
Investors also seem confident in the recovery of international travel as well as tourism as was evident in EasyJet’s recent bond sale. On February 24, 2021, the airline raised €1.2 billion ($1.46 billion) during a seven-year bond sale.
Investor demand was much higher, at €5.8 billion, according to Reuters. Consequently, EasyJet reduced the yield on offer from 2.375% to 2%.