European travel stocks are still nowhere near their pre-coronavirus levels

European travel and leisure stocks have rebounded in recent weeks but still have a long way to go before returning to pre-crisis levels. The Stoxx 600 travel and leisure sector, which covers 16 companies, sank 42% in the first quarter of 2020. This was on the back of lockdown measures across Europe and wider travel restrictions to contain Covid-19. In comparison, the sector gained 6% in the second quarter of 2020.

European economies have begun to reopen during the second quarter as infection rates have slowed. However, this has been done gradually and there are still many travel restrictions in place. For instance, Greece is still not welcoming British tourists and many summer destinations have opened their doors again with strict social-distancing measures, which will limit capacity in hotels and restaurants.

The industry will have to convince customers that it’s safe to travel in order to boost demand. EasyJet said earlier this month that it expects capacity to grow in the summer season, but it estimated that in the fourth quarter of its fiscal year (between June and September), capacity will be only 30% of its planned pre-Covid-19 numbers. Ryanair said in May that it will carry no more than 50% of its original traffic in the period between July and September.

Airlines have been one of the hardest hit businesses by the pandemic. However, there has been significant government intervention to keep some of them afloat. Lufthansa, for instance, agreed to a 9 billion euro ($10.11 billion) bailout with the German government. In France, the government also developed a 7 billion euro rescue package for the French arm of Air France-KLM, while the other half received a bailout from the Dutch government.

European travel stocks are still nowhere near their pre-coronavirus levels, CNBC, Jul 1