Keep Calm and Carry On: Airline CEOs say Market Over-Reacted to Brexit

Carolyn McCall, head of British No.2 low-cost carrier EasyJet, said there was an immediate effect on ticket sales because a tumbling pound made it more expensive for British citizens to travel abroad. But, from a longer-term point of view, nothing has really changed, she said.

“It was a seismic political decision for this country to take. No one can underestimate that,” McCall told a conference in London, according to Skift. “It was a shock to the markets. The markets definitely over-reacted to that.”

Willie Walsh, CEO of British Airways owner IAG, told the same conference that the fundamentals of his business remained strong. “I am not in any way concerned about the impact of Brexit, except for short-term uncertainty,” Walsh said.

Shares in IAG and EasyJet tacked on a couple of percent following their CEO’s respective comments, although they’re both still down by around 20% since June’s Brexit vote.

Bank shares also remain under pressure amid uncertainty over whether companies such as Barclays and Lloyds will still be able to market products directly to European customers. Mark Wilson, CEO of British insurer Aviva, said the government needs to provide business with more certainty.

“There is an extraordinary amount of work to do and it’s up to businesses to have a say in that,” he told Bloomberg in an interview published this morning.

Overall, however, Britain’s benchmark FTSE100 index is actually stronger, having recovered from an immediate fall after the vote to be 8.1% higher. The broader FTSE250 index, which contains a greater proportion of companies focused solely on the British economy, is up a more modest 4.6%.

The pound remains under pressure after the Bank of England last month cut the UK’s official cash rate to a record low of 0.25%.

That indicates policymakers fear the economy’s not in great shape and needs a jolt, though recent better-than-expected British manufacturing and construction figures indicate the rate cut could be working.