MARKET REPORT: Airlines lose altitude as increased gasoline prices chew

Airlines lost altitude as the ongoing strength in oil prices raised the prospect of higher fuel costs once again.

EasyJet was a big FTSE 100 faller, down 3.1 per cent, or 17p, to 540.4p and British Airways owner IAG – a top blue-chip gainer in 2024 – shed 1.2 per cent, or 3.7p, to 298.9p.

AJ Bell analyst Russ Mould noted that airlines had enjoyed easing cost pressures in 2024 as oil prices receded on hopes for global economic growth. However, with oil creeping higher again at the start of 2025, he said fuel costs could return as a meaningful headwind for the industry.

FTSE 250-listed Wizz Air edged lower even after reporting an increase in traffic figures for December. Budapest-based Wizz saw its passenger numbers rise 2 per cent to 5.06m last month, up from 4.96m a year earlier, with its load factor – a measure of how full planes are – rising to 86.5 per cent. Wizz slipped 1.8 per cent, or 26p, to 1390p.

Irish discount airline Ryanair also reported December traffic figures, which showed it carried 13.6m passengers, up 8.4 per cent from 12.5m in a year earlier.

But the airlines’ December load factor of 92 per cent was a little lower than some analysts’ forecasts, and Ryanair’s Dublin-listed shares lost 2.1 per cent.

After a positive start to 2025, London’s benchmarks soon saw the mood reverse.

The FTSE 100 index slipped 0.4 per cent, or 36.11 points, to 8223.98 and the FTSE 250 index ended off 0.2 per cent, or 48.83 points, at 20591.4.

Diageo was a big blue-chip faller, dropping 3.9 per cent, or 99p, to 2448.5p after the US Surgeon General called for alcoholic beverage labels to include cancer warnings.

The owner of Guinness and Johnnie Walker also suffered as the advisory suggested that recommended limits for alcohol consumption could be reassessed.

Drugs giant GSK was also weak, down 1.6 per cent, or 21.5p, to 1340p, even as it reported that its Nucala treatment has been approved in China to treat long-term sufferers of a sinus ailment following a phase 3 study. And miners pulled back after recent gains, with Anglo American down 1.5 per cent, or 35p, to 2346.5p, and Rio Tinto sliding 1.4 per cent, or 66p, to 4698p.

But oil majors climbed, with Shell ahead 1.6pc, or 39.5p, to 2566.5p, and BP up 1.2 per cent, or 4.8p, to 407.95p. On the FTSE 250, Harbour Energy gained 2.8 per cent, or 7.3p, to 268p and Ithaca Energy added 3.6 per cent, or 4.2p, to 122.2p.

Meanwhile, Tullow Oil – which was excited before Christmas by Kosmos Energy (down 3.6 per cent, or 11p, to 298p) bid talks, even though they were swiftly terminated – jumped 8.1 per cent, or 1.76p, to 23.62p boosted by a positive tax verdict.

The International Chamber of Commerce has decided that branch profit remittance tax (BPRT) is not applicable to Tullow Ghana since it falls outside the tax regime provided for in its petroleum agreements.

As a result, Tullow Ghana is not liable to pay the £258m BPRT assessment issued by the Ghana Revenue Authority and will have no future exposure to BPRT in respect of its operations under the agreements.