European airline stocks plummet
U.S. travel ban another hit to already reeling industry
LONDON—Governments and airlines scrambled to react to the announcement of a nearblanket travel ban to the U.S. for most Europeans, while global stock markets fell sharply again.
The European Union criticized the decision, saying it had been blindsided by the ban. President Trump announced the restrictions in the middle of the European night Wednesday, as part of a U.S. effort to contain the spread of the novel coronavirus.
“The coronavirus is a global crisis, not limited to any continent and it requires co-operation rather than unilateral action,” the European Commission, the EU’s top policy-making body, said.
Airlines stocks plummeted anew. The ban restricts European travellers from 26 countries for the next 30 days and will begin Friday at 11:59 p.m. The U.K. and Ireland are exempt and the suspension applies only to people, not cargo.
European equity indexes fell steeply Thursday, with the Stoxx Europe 600 shedding almost 6% and the selloff most pronounced in airlines, travel and leisure companies. The pan-continental index is down 15% this week, on course for its worst week since October 2008.
The new ban is a fresh hit to an industry already reeling from passengers’ sudden fear of flying and prior travel restrictions to the worst-hit countries, including China and Italy. Airlines have scrapped thousands of flights, instigated cost cutting—including hiring freezes and mandatory unpaid leave— and in some cases, rushed to raise capital.
Carriers are now scrambling to rework schedules to meet the new U.S. requirements.
“I can’t recall anything that comes close to this,” said Peter Harbison, chairman at the Australia-based research firm CAPA—Center for Aviation. “On a global scale it’s the most difficult environment for airlines ever in modern times.”
Shares of Norwegian Air Shuttle ASA, a budget carrier popular among trans-Atlantic flyers, plunged nearly 19% Thursday, extending this year’s rout to 79%.
Deutsche Lufthansa AG and Air France-KLM Group—the two airlines most exposed to the new ban because of their extensive flights to the U.S.— were down 12% and 13% respectively on the day.
International Consolidated Airlines Group SA, the owner of British Airways, Spain’s Iberia and Dublin-based Aer Lingus, fell 8.6%.
A Lufthansa spokesman said the carrier was assessing the potential impact of the planned ban.
“We’re still trying to understand what concretely this ban means as we don’t yet have a decree in front of us,” he said.
The restrictions prevent non-U.S. travelers who have been in certain European countries within a 14-day period from travelling to America. U.S. citizens and green-card holders are exempt, along with their spouses and children.
Valérie Boned, secretary general of Les Entreprises du Voyage, a French association of travel agencies and tour operators, said that between 300,000 and 400,000 French people were due to travel to the U.S. over the next three months for business or leisure.
“Now everything is stopping. The repercussions are huge, particularly for agencies specialized in business travel,” she said. Asian carriers have been under strain for months and several have already announced layoffs and placed employees on unpaid leave.
In China, government officials took control of the board of Hainan Airlines Co. Ltd., the country’s fourth largest airline, in late February, after disruption caused by the coronavirus derailed its parent company’s debt-reduction plans. On Wednesday, Hong Kongbased Cathay Pacific Airways Ltd. said it would suffer substantial losses in the first half of 2020, having been forced to slash around two-thirds of its schedule in March and April. Benchmarks in Hong Kong, India and South Korea also fell to multiyear lows, while crudeoil prices dropped. Japan’s Nikkei 225’s plunged 4.4% and Australia’s benchmark S&P/ASX 200 fell 7.4% to its lowest in more than three years.
The global selloff that plunged U.S. stocks into a bear market continued Thursday, as investors absorbed the news of the new travel ban and some companies issued warnings about their survival prospects.
Futures linked to the Dow Jones industrial average dropped roughly 5%, suggesting the blue-chips gauge could open more than 1,000 points lower. Contracts linked to the S&P 500 index also briefly hit the 5% daily limit.