Airlines and tour operators might have to ask investors and/or lenders for more money to survive another year with summer holidays potentially in doubt.

Summer 2021 had been earmarked as the period where the sector could finally see a meaningful recovery, but politicians have cautioned people against booking holidays for now and the UK Government’s scientific advisers have warned international travel is unlikely ‘for the average holidaymaker’ this July and August due to the threat of new coronavirus variants and their impact on vaccines.

The share price movements of most airlines and tour operators have been led by investor optimism or pessimism over summer holidays since the pandemic began, and many including British Airways owner International Consolidated Airlines (IAG), tour operators TUI (TUI) and Jet2 (JET2:AIM), and budget airline EasyJet (EZJ) have dropped sharply in response to the latest threat to summer getaways.

Summer is the crucial period for the travel sector where businesses recoup losses made in winter, and most companies in the industry, as well as investors, were betting on a big uptick in demand this summer compared to last thanks to the rollout of vaccines, and capacity was set to be increased.

However, as it stands it remains to be seen if they have enough liquidity to endure another summer with little income, though some airlines have sought to raise cash in recent weeks.

IAG raised €1.2 billion in a bond issue in mid-March which the airline said would help it ‘withstand a more prolonged downturn in air travel’. At the end of 2020, IAG had €10.3 billion in available cash, while in the first quarter of 2021 it has managed to slash its weekly cash burn by 55% to €185 million per week, compared to the same period in 2020.

EasyJet raised €1.2 billion in a bond issue in February and has consistently made it clear to investors throughout the pandemic that it will ‘continue to review its liquidity position on a regular basis and will continue to assess further funding opportunities, should the need arise.’

Before the bond issue it had ‘unrestricted access’ to £2.5 billion in liquidity, while in a fully grounded scenario its weekly cash burn stands at £40 million per week.

One prime candidate to raise more cash is TUI, which has been bailed out by the German government three times since the pandemic began, and in its latest update said only that it had ‘liquidity bridged to the summer 2021 travel recovery’. As of 3 February, it had €2.1 billion in liquidity and monthly cash burn between €250 million and €300 million.

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