British Airways, Easyjet shares soar as Iran ceasefire brings relief for airlines
Airline stocks have soared following President Trump’s announcement of a ceasefire with Iran, offering cautious relief to fears flights could be grounded in weeks.
Shares in British Airways owner IAG soared by more than 10 per cent on Tuesday’s market open, as the FTSE 100 firm was followed by WizzAir and Easyjet who also made gains.
Leading airlines had been bracing for prolonged disruption due to the conflict in the Middle East, which had caused the price of aviation fuel to spike.
But the US President’s announcement of a two-week pause to the war offers a lifeline to airlines, whose stocks had been plummeting in recent weeks.
Shares in FTSE 250 budget airline WizzAir soared by more than 16 per cent, up to 996p, while the stock was still down more than 23 per cent in the year so far.
Easyjet’s share price rose more than 12 per cent in early trading to 402p, leaving the FTSE 250 stock down 21 per cent this year.
WizzAir and Easyjet have been targeted by short-sellers in recent months, as hedge funds bet that continuing disruption would keep their share price in free fall.
Ceasefire eases flight cancellation fears
Around half of Europe’s imports of jet fuel come from the Gulf, with the majority of these stalled due to the blockage of the Strait of Hormuz, a crucial shipping passage near Iran.
The benchmark European price of jet fuel hit an all-time high of $1,838 (£1,387) per tonne, more than double $831 before war broke out.
On Tuesday, Air India and Air New Zealand said they would cut flights and put up air fares to combat rising fuel prices.
Other leading providers – including China Eastern Airlines, Korean Air and United Airlines – had already taken emergency measures to insulate themselves from the crisis.
Michael O’Leary, the boss of budget airline Ryanair, had warned he may be forced to cancel 10 per cent of its summer flights unless the war ends soon.
Airlines said last week they face a five-week cliff edge before fuel shortages could ground flights.
But stock broker Panmure Liberum said the ceasefire offers a lifeline to airlines.
Research analyst Gerald Khoo said: “News of a two-week ceasefire in the Middle Eastern conflict, assuming it holds, is a clear positive for the airlines.
“While the futures curve for the summer and beyond is higher than pre-conflict, the levels are within the historical range and should be manageable.”
But the boss of the International Air Transport Association (IATA) warned it will take months for jet fuel prices to recover.
Willie Walsh told AFP: “I don’t think it’s going to happen in weeks.”
Trump: Strait of Hormuz will open ‘immediately’
President Trump announced the eleventh-hour ceasefire late on Tuesday night, having warned Iran that “a whole civilisation will die” if his deadline for talks was not met.
He said Iran and the US will cease attacks for two weeks while talks are held, as the countries discuss a ten-point peace plan proposed by Iran.
The ceasefire is subject to the “complete, immediate and safe opening of the Strait of Hormuz,” Trump wrote on Truth Social.
Iran’s foreign minister later confirmed the ceasefire, saying his country will pause fighting and guarantee safe passage through the strait if the US stops its attacks.