MARKET REPORT: Travel firms take off as Britons book trips to the Med

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Take-off: Demand for last-minute summer holidays has been so much better than expected that budget airline Easyjet has now expanded its schedule


MARKET REPORT: Travel firms take off as Britons ignore the quarantine threat and book last minute trips to the Med

Travel company shares took off after a buoyant update from budget airline easyJet.

Demand for last-minute summer holidays has been so much better than expected that the company has expanded its schedule.

It had been planning to operate at about 30 per cent of its capacity between July and September.

Take-off: Demand for last-minute summer holidays has been so much better than expected that budget airline Easyjet has now expanded its schedule

But it will now bump this up to 40 per cent, and will be running 1,000 or so flights a day in August. Some of the most popular destinations have been Nice in the south of France and Faro in Portugal, even though Portugal has not yet been included in any air bridge agreements.

Chief executive Johan Lundgren said customers still have ‘an underlying desire and willingness to book and travel’, especially to get away on a beach break.

He also said the UK’s swift decision last month to impose a two-week quarantine on those arriving from Spain hadn’t caused customers to cancel their plans en masse – but said that late bookers were just looking elsewhere at places such as Greece and Croatia.

Stock Watch – Genedrive 

Genedrive surged after the diagnostics firm said it was working on technology to speed up coronavirus testing.

The London-listed company said its collaboration with US-based Beckman Coulter Life Sciences would involve automating the laboratory process to deliver faster results, aiming to process 1,000 tests in eight hours.

Genedrive boss David Budd said he hoped the technology could be introduced in labs in six weeks’ time. Shares rose 27.5 per cent, or 19.5p, to 90.5p.  

Unsurprisingly, the fact that it ran a mere 709 flights in the three months to June, compared with 165,656 a year ago, pushed it to a £325million loss.

This was down from a £174million profit in 2019.

But these figures weren’t what the stock market was focused on.

The change in tone about summer holidays, following news rivals were curbing services to Spain and being hammered by the shock quarantine, was exactly what traders wanted to hear.

EasyJet rose 8.8 per cent, or 44.4p, to 551.6p – and it brought the rest of the sector up too. 

British Airways owner IAG climbed by 7.1 per cent, or 11.55p, to 175.4p on the FTSE 100 index, while Tui rocketed 9.1 per cent, or 26.3p, to 314.2p on the mid-cap index.

The rally helped keep both of London’s top indexes in the black, though only just.

The Footsie rose 0.05 per cent, or 3.15 points, to 6036, while the FTSE 250 rose 0.9 per cent, or 149.58 points, to 17307.7.

The blue-chip index also got a boost from GKN-owner Melrose, which managed to thrash out new terms with its banks that it says will give it ‘considerable headroom and flexibility’.

The company, which makes parts for the hard-hit car making and aerospace sectors, has already scrapped its dividend and says job cuts are inevitable.

But the breathing room sent shares 9.4 per cent higher, up 8.28p, to 96.5p – and straight to the top of the Footsie leaderboard.

Defence contractor Babcock International had a more difficult start to the week.

The company won’t pay a dividend for the past year after profits took a 40 per cent knock in its most recent quarter and revenues fell.

It said this was an ‘appropriate’ decision given that it had been tapping into the Government’s coronavirus furlough scheme.

Doing the honourable thing didn’t do much for its shares, though, with its stock falling 9.4 per cent, or 27.2p, to 261.8p.

Direct Line and Centamin both unveiled better news on dividends. Insurer Direct Line rose 5.3 per cent, or 16.4p, to 324p after pledging a 7.4p per share half-year payout and a one-off 14.4p divi to replace the annual one that it previously suspended.

It came as the number of motor claims dropped by as much as 70 per cent at the peak of lockdown.

And gold miner Centamin rose 2.1 per cent, or 4.3p, to 211.8p, after the coronavirus-driven surge in gold prices so far this year helped push first-half profits from £45.6million last year to £146million.

It increased its divi by 50 per cent to around 4.6p per share.

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