European Travel Stocks Lead Gains Amid Omicron Data Optimism

(Bloomberg) -- Travel and leisure stocks led gains in Europe on Thursday on optimism that omicron will be milder than earlier Covid-19 strains, with an index tracking the sector now higher for the year.

The Stoxx 600 Travel & Leisure index added as much as 2.7% to reach a one-month high after researchers in Scotland found omicron was associated with a two-thirds lower risk of hospitalization compared to the delta variant. British Airways-owner IAG SA and Wizz Air Holdings Plc were among the best performers, rising more than 4%, while hotelier Accor SA tour operator TUI AG were also boosted. 

Airlines also shrugged off a profit warning from Ryanair Holdings Plc that was first reported late in the trading session on Wednesday.

Given the omicron findings, “summer 2022 could still be strong as demand resumes quickly once restrictions are removed,” Morgan Stanley analyst Carolina Dores wrote in a note to clients, while cautioning that Ryanair’s update could weigh on peers in the near term.

The travel and leisure index was also buoyed by a 3% gain for Flutter Entertainment Plc after the gambling group announced an acquisition in Italy.

The benchmark is up 3% in 2021 versus a 20% rise for the broader Stoxx Europe 600, making it the region’s worst-performing sector. Airlines including IAG, Wizz and Deutsche Lufthansa AG remain in the red year-to-date.

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