Freedom day delay: Airline stocks dive as UK businesses demand fresh emergency support

Travel and hospitality stocks in London suffered a blow on Monday as news circulated that the full reopening of the economy was set to be delayed for another four weeks, while UK businesses called on the government for emergency support.

Aircraft engineer Rolls Royce (RR.L) was leading the FTSE 100 (^FTSE) laggards, down 2.4%, while British Airways owner IAG (IAG.L) slumped 1.8%.

EasyJet (EZJ.L) was also amongst the top fallers on the FTSE 250 (^FTMC), tumbling 1.7% on the day. Casino operator Rank Group (RNK.L) also fell into the red, along with cinema chain Cineworld (CINE.L) and pub and restaurant group JD Wetherspoons (JDW.L).

On Monday evening, prime minister Boris Johnson set to confirm a delay to the planned unlocking of the UK economy on 21 June at a news conference.

It comes amid rising cases of the Delta variant in Britain, which was first identified in India.

Over the weekend, new data confirmed that more than 90% of COVID cases in the UK are now down to the Delta strain, as the total number of cases passed 42,000, Public Health England (PHE) said.

The PHE report further revealed that cases of the virus are doubling between every 4.5 and 11.5 days, depending on the region of England, and that it has about a 60% increased risk of household transmission compared with the Alpha variant, which was first detected in Kent.

Richard Hunter, head of markets at Interactive Investor, said: “In the UK, the likelihood of an extension to the current lockdown restrictions is something which the market is expecting.

“Hospitality and travel stocks in particular have seen another downward lurch, with the additional complication of certain of the government assistance schemes also nearing an end. There is therefore likely to be something of a compromise along the way, as the government is likely to play the cautious health card ahead of completely letting the economy loose.”

Read more: FTSE opens higher despite lockdown easing set to be delayed by one month

UK businesses are now urging the government to extend emergency COVID-19 support amid the delay.

UKHospitality said a one-month delay would be devastating for the sector, and that ministers must offer more support to firms, including extending a moratorium on evictions and debt collection from commercial tenants that is due to lift on 30 June.

Kate Nicholls, chief executive of UKHospitality, said that many businesses are “running out of road” after 16 months without revenues, warning that a four-week delay would cost the sector around £3bn ($4.2bn) in lost sales.

Meanwhile, the Night Time Industries Association (NTIA) said one in four businesses will not survive longer than one month without further government support and 50% no longer than two months.

Some 33% of businesses estimate they will lose over 30% of their workforce due to the delay in the easing of lockdown on 21 June.

“These businesses are overburdened with debt, so any decision to delay will make them heavily reliant on the government to extend financial support and relief, including additional restriction grants, exclusion from furlough contributions, extension of loan repayment holiday for CBILS/BBS as well as business rates and VAT relief for the next 12 months, not forgetting the £2.6bn in commercial rent debt left unresolved,” Michael Kill, NTIA chief executive said.

Watch: Johnson to delay reopening as UK infections rise

Reactions from other industries also started flooding in, with Theatres Trust director Jon Morgan saying that a four-week delay to the end of lockdown restrictions is “wholly understandable” but will be “difficult” for the theatres sector.

He said: “Although many theatres have temporarily reopened with reduced audiences, continuing to operate at significantly reduced capacity is economically unsustainable. Other venues that were planning to reopen when full audiences were permitted may be forced to cancel shows.

“It is vital that the additional £408m allocated to the Culture Recovery Fund in the budget is distributed quickly and targeted to those organisations most impacted by this setback.”

Theatre impresario Sir Howard Panter, co-founder of theatre operator Trafalgar Entertainment, said the industry will suffer “significant damage” if the final lifting of coronavirus lockdown restrictions in England is put on hold.

Read more: 'Last in, first out' fears holding back UK workers from changing jobs as vacancies soar

He told the PA news agency: “The reality is we have marched the troops up the hill. We have mobilised a whole industry in order to get going because we have been keeping the industry going for the last 15 months”

“It costs money. We haven’t had government help. We have kept it going. And now, surprise, surprise, the industry needs some income. People need work.

“Thousands of people have been mobilised in order to work in the theatre industry, to start work from next Monday and now we are being told, apparently, ‘Oh no, it’s not that date. It may be some other date, we don’t really know’.”

Junior health minister Edward Argar told the BBC on Monday that more government support for businesses is likely if there is a delay to easing Britain's lockdown restrictions.

"Were he [Boris Johnson] to make an announcement that he's delaying it, I would expect him to address that issue as well at the same time," Argar said when asked if there would be extra support for businesses.

Watch: Health minister: Prime Minister weighing up lockdown easing delay