Another week, another potentially life-changing vaccine. This time it is the turn of US biotech group Moderna, which has said its vaccine has proven to be 94.5% effective in late-stage trials. It is more very good news in the hunt for an effective coronavirus vaccine and it immediately had a positive impact on global stock markets.
Just as we saw after the revelation last week that Pfizer and BioNTech had scored a breakthrough, Moderna’s news yet again sent stocks left behind in the pandemic soaring. The real hope of an end in sight and a return to ‘normal’ life - and with it the prospect of people once again hopping on planes to travel abroad for business and leisure - has brought some much-needed hope to the beleaguered airlines sector.
For budget airline easyJet, last week’s 35% boost to its share price saw it claw back most of the losses it has suffered over the course of 2020. But this is far from game over. And recent figures are a sharp reminder of that.
Showing just how hard hit it - and the rest of the travel sector - has been by the pandemic, easyJet today posted its first ever annual loss in its 25-year history. Pre-tax profits slid £1.27 billion into the red as revenues more than halved, with planes were left grounded by the pandemic.
So much hinges on the success of a vaccine for the likes of easyJet. Without an end to the pandemic its fate looks sealed. There is no question that the roll-out of a successful vaccine is a game-changer. But there is a very long way to go yet.
Even with a number of viable vaccines, it will take time to vaccinate everyone - or a sufficient number globally - to contain the pandemic. And it is this timeframe that is likely to cause the most harm to the companies that have seen their businesses hardest hit by the national lockdowns and global travel bans.
Never before has the fate of two such seemingly disparate stock market sectors - biotech and airlines - been so closely correlated. How many times have we been told since the start of this pandemic that “the science” will guide us? Well now “the science” could single-handedly save the airline industry.
For the time being though things are unlikely to get much better very quickly at all. Today easyJet said it expects to fly no more than about 20% of planned capacity for the first quarter of 2021.
Speaking on BBC Radio 4's Today programme easyJet chief executive Johan Lundgren described the arrival of a successful vaccine as “a very critical part of the recovery". He said that such is the latent demand for travel that on the day the news broke of the success of the Pfizer vaccine, bookings for the airline up were by almost 50%. There is no question that the beleaguered airline sector is waiting with baited breath for a viable vaccine and clearance to properly take off once this is all over. People across the country will be doing the same. Just be prepared to be in it for the long haul, because there is still a lot of potential turbulence ahead.
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