Deutsche Bank sees travel operator TUI AG (LSE:TUI) as one of the shares most at risk if the omicron strain of covid-19 spreads while caterer Compass plc has been oversold.
The German bank said for most sectors the slump on Friday priced in most of the downside impact of omicron, but some travel groups are exposed and Tui is one of those.
“While much uncertainty remains, we think a realistic downside case scenario might leave H1 22E looking more like H1 21 (a period with significant restrictions) but with an as-expected normalisation thereafter.
Using the lost earnings in H1 22E as a % of market cap and comparing this to the market cap losses on Friday, Deutsche Bank concludes that that significant restrictions/disruption through H1 22E is more than priced in for most companies covered.
“We accept that this approach is a blunt tool but we think it should serve as a useful benchmark until more is known about the variant.
“On this basis Compass looks most harshly treated while we see most risk at TUI.”
Willie Walsh, the former head of British Airways owner IAG and now head of travel body IATA, meanwhile has branded the recent tightening of air travel restrictions as ‘completely ineffective.
Britain and other countries in Europe imposed a ban on flights from southern Africa on Friday due to concern over the spread of the newly-discovered omicron variant of coronavirus.
Restrictions had already been tightened in parts of Europe due to the spread of the Delta variant across the continent.
Walsh told the BBC: ” It’s clear that these measures have been completely ineffective in the past but impose huge hardship on people who are trying to connect with family and friends and clearly massive financial damage to the tourism and airline industry.”
The former BA chief added that banning flights would not keep the virus out of the UK, with a sensible testing regime a much better option.
Airlines shares recovered a little from their heavy falls on Friday, when the UK government announced its decision to put six countries in southern Africa on its quarantine red list due to the identification of omicron in South Africa.
IAG rose 4% to 136.8p while easyJet climbed a similar amount to 420p.
TUI AG meanwhile said all UK customers due to travel before 21 December would be able to change to another date due to the new travel curbs. Its shares rose 4.8% to 208p and Compass 4.7% to 1.522p.