U.K. Airlines Surge on Virus Data as London Traders Catch Up

(Bloomberg) --

U.K. airline stocks surged as London traders played catch-up following Monday's holiday while digesting data suggesting a milder impact from omicron than prior Covid-19 variants.

British Airways owner IAG SA soared as much as 11%, the most in more than three months, with short-haul peer Wizz Air Holdings Plc also gaining 11% as it reported a jump in passenger numbers last month. Ryanair Holdings Plc rose as much as 10% in Dublin as the Irish capital also reopened for trading, while travel stocks Carnival Plc and TUI AG jumped.

Carriers in continental Europe rose Monday as data continues to indicate omicron is less likely to cause serious illness, particularly in vaccinated people, spurring optimism that tighter restrictions on traveling will be avoided. A U.K. report published Dec. 31 said that the risk of needing emergency care or hospital admission with the variant was roughly half that for delta.

READ: What We Know About the Omicron Variant Now: QuickTake

According to a BBC report, U.K. Prime Minister Boris Johnson said that the U.K.'s current ‘Plan B' measures, which do not include the closure of any shops or leisure venues, are the right approach. U.K. pub stocks including Mitchells & Butlers Plc and Wagamama owner Restaurant Group Plc also rose.

Still, even after this week's rebound, travel and leisure remains Europe's big underperformer since the pandemic began. The Stoxx Europe travel and leisure index is down about 9% over the past two years while the broader Stoxx 600 has gained 18%. IAG shares are down about 60% over the period, while Deutsche Lufthansa AG is down about 40%.

Citigroup Inc. analysts published a bullish note on European airlines Monday, upgrading Lufthansa to buy from sell. Long-haul firms are set to benefit from a recovery in corporate and transatlantic travel, the broker said.

The travel and leisure sector was the best-performing group in Europe on Tuesday, up 3.2% at 10:00 a.m. U.K. time versus a 0.6% gain for the broader gauge.