- Shares in easyJet, Ryanair, the British Airways owner IAG and other airline stocks rose Thursday as investors seemed to bet on a surge in summer-vacation bookings resulting from Brexit's delay to the end of October.
- easyJet said last week that Europeans were holding off on buying plane tickets to and from the UK because of the "many unanswered questions surrounding Brexit."
- The Brexit delay is just a temporary reprieve for easyJet, as it assumed "a more certain Brexit outlook" would provide a tailwind in the six months to September.
- Watch easyJet trade live.
European airline stocks climbed Thursday as investors seemed to bet that a delayed Brexit would spark a surge in summer bookings.
Shares in easyJet, Ryanair, and the British Airways owner IAG all rose by 4% to 8%. Wizz Air and the Jet2 owner Dart Group also rose 2%, while the travel group TUI's stock jumped 6%.
The European Union on Wednesday evening extended the deadline for Britain's exit from the bloc, previously scheduled for Friday, to the end of October.
"European airlines have rallied as the risk of a Brexit-related demand shock recedes," the Cantor Fitzgerald analyst Robin Byde told Business Insider in an email. "The planned delay to Brexit also protects airline revenues through the crucial summer season."
The rebound came at the right time for easyJet, which warned last week that Europeans were holding off on booking their summer vacations because of the "many unanswered questions surrounding Brexit."
Hesitant travelers depressed easyJet's ticket sales and pushed its seat prices down about 7% in the six months to March, prompting the group to adopt a more cautious outlook for the summer. Its shares dropped by one-tenth on the news and dragged rivals stocks down with them.
UK Prime Minister Theresa May's agreed extension of the Brexit deadline to October 31 may well be the sunshine needed for Europeans to book their summer flights, but it could represent only a temporary parting in the clouds.
easyJet had guided toward revenue per seat rising in the six months to September — after it shrunk more than 7% in the first half — partly over an "assumption of a more certain Brexit outlook." Given the lack of a resolution, it can no longer make that assumption.
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