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Airline stocks nosedive as US travel ban hits EU travel sector

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AFP Paris
Last Updated : Mar 12 2020 | 10:22 PM IST

Europe's travel sector reacted with dismay Thursday to a US-imposed trans-Atlantic travel ban with the share price of major airlines going into free fall.

President Donald Trump said the measure would stem the spread of coronavirus, but an EU diplomat in Brussels called it "erratic".

Air France stock lost almost 18 percent at the Paris opening bell, before recovering to trade five percent lower in mid-afternoon exchanges.

Lufthansa shares, quoted in Frankfurt, were off by almost nine percent.

The US is not banning passengers from Britain, but shares in British Airways' parent company IAG still slumped more than 10 percent, while EasyJet lost over nine percent.

"Trump is simply kicking a man when he's down," the EU envoy charged.

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Trump said the US would not allow travellers from the EU's Schengen border-free zone into the country for 30 days, calling the move an "aggressive" effort to contain the spread of COVID-19, the disease caused by the new coronavirus.

The decision does not affect visitors from Britain and Ireland, or US citizens returning from Europe.

Key US companies were hit even harder than their European counterparts, with the sector suffering its worst downturn since the September 11, 2001 attacks.

Boeing, already reeling from problems with the 737 MAX jet, lost 14 percent by the time trading was suspended Thursday, which added to its 18 percent drop a day earlier.

Shares in United Airlines shed nearly 15 percent on Wall Street before trading was suspended after the S&P 500 index lost seven percent.

Global markets have lost a combined $11.3 trillion in value since a peak on February 19, and $4.5 trillion this week alone.

American Airlines and Delta plunged by double-digit percentages.

"The travel ban is another hammer blow for the airlines" that "were getting crucified by the reduction in tourism and business travel in the last month," said economist Charlie Robertson at Renaissance Capital in London.

Peter Elbers, chief executive of the Dutch carrier KLM told public television NOS: "it is undeniable that the consequences are extremely heavy." Fears that other countries might follow the US example "are paralysing the market," said Timo Emden of Emden Research.

French Finance Minister Bruno Le Maire told a press conference: "Trump's announcement is bad news for all airlines." Le Maire "regretted" a decision "which will have a very strong impact on tourism and a very strong impact on companies in general."

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First Published: Mar 12 2020 | 10:22 PM IST

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