- In common with other aviation shares Easyjet is a trade on covid and lockdowns, travel restrictions
- As a short-haul specialist Easyet faces slightly different headwinds from the long haul and legacy airlines
- The big question is when will governments allow travel to be easy again?
Easyjet PLC (LON: EZJ), in common with all the other airlines, has taken a beating in these days of covid and lockdowns. Equally in common with the other airlines, Easyjet’s share price is buoyed by the hope that at some point travel is going to be allowed in volume again. What keeps the price depressed though is the uncertainty over when that will happen.
It’s possible to take different views on this and Easyjet of course. If, after delta and omicron, there are another two or five variants coming for us all then that opening up of travel is going to be delayed again. But it’s not, not really, just governments allowing travel that is going to bring back the glory days at Easyjet.
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Travel needs to return to being simple. International – even if short-haul – travel has to get back to being like taking a sky bus again for the shares to really soar. It’s not just when we’re all allowed to travel again, but when travelling is a no-fuss activity. Without requiring testing ant either or both ends. Without worrying over whether the rules will change and a desperate dash for an earlier flight has to be made.
This depends not just on the absence of new variants. It requires that governments all relax and reduce, even eliminate, all of the current restrictions. Quite how long that is going to take is unknown – if they leave Sage in charge of it perhaps never.
On the other hand, we do know that the average virus becomes more infectious and less dangerous as the generations pass. A useful portion of common colds are coronaviruses this has happened to after all. Treatments for covid are advancing, Prizer and Merck are expected to gain authorisation from the FDA in the next few days for their pills. Vaccination will eventually damp down the spread of covid.
At some point, there will indeed be that relaxation of the rules surrounding travel. Our difficulty in valuing a short-haul airline is in our not knowing by how much and when.
Again, the importance for Easyjet – as opposed to the long haul and legacy carriers – is not when we’re allowed to travel freely again. It’s when can we travel simply again? When can we think on a Thursday that perhaps Friday in Vienna, or Paphos, or Porto, is a good idea and then book and go?
The Easyjet share price is going to vary dependent upon the general view of all of these interlocking factors. Treatments for covid, evidence of decreasing clinical effects of infection, even the possible absence of new waves. But the deciding factor is likely to be when governments finally say, yep, it’s over, back to normal. When airplane rides become simple again is when Easyjet might soar back.