LOS ANGELES/PARIS (Reuters) – European airline stocks already battered by the coronavirus plunged again on Thursday, as a U.S. travel ban on much of continental Europe deepened the sector’s misery and piled pressure on governments to offer emergency support.
FILE PHOTO: Airplanes of German airline Lufthansa and U.S. carrier United Airlines land and take off at Frankfurt Airport, Germany March 2, 2020. REUTERS/Kai Pfaffenbach/File Photo
Shares in European carriers, some of which have fallen by more than half since the virus outbreak first halted flights to China, suffered further double-digit declines as markets opened.
The 30-day U.S. curbs on travel from the 26-country Schengen Area – which excludes Britain and Ireland – are similar to those that went into effect targeting China on Feb. 1 and do not apply to U.S. residents or their immediate family.
“The impact of the ban will be more substantial” for major European carriers than the earlier China flight suspensions, Bernstein analyst Daniel Roeska said – because the North Atlantic accounts for a large share of their long-haul profits.
“The ban effectively stops travel from the Schengen Area to the USA,” Roeska said.
Air France-KLM shares were down 15%, with Lufthansa and British Airways parent IAG almost 11% lower as of 0833 GMT. Norwegian Air, which was struggling to avert a cash crunch even before the coronavirus crisis, was down 18%.
Lufthansa said it was assessing the impact of the changes on its U.S. operations, while Air France KLM did not respond immediately to a request for comment.
The news also sent Asian airline shares sliding during the region’s trading day, with analysts warning of a big impact.
It came as airlines, tourism and airport operators were already scrambling to respond to a global slump in travel that is increasingly likely to require government aid to tide companies through the crisis. The European Union will publish new state-aid guidelines on Friday.
ADP declined to comment on a Thursday report that it was preparing to close terminal 3 at Roissy Charles de Gaulle, the French capital’s biggest airport.
Norway is considering whether to close down several airports as part of its efforts to curb the spread of the virus, airport operator Avinor told the public broadcaster NRK.
U.S. President Donald Trump said the ban were needed because the country was entering a “critical time” in the fight against the virus, which has spread across the United States and killed at least 37 people and infected 1,281 there.
U.S. airlines had already cut flight schedules to Italy, facing the largest European outbreak, and will take another hit from lower demand for flights from major destinations such as France and Germany.
Nicholas E. Callio, president of airline trade group Airlines for America, said the ban would hit U.S. airlines, their employees and travellers “extremely hard”.
He said his group respected the need to take the unprecedented action, but Association of Flight Attendants-CWA President Sarah Nelson called the ban “irresponsible”.
“There is no explanation for how this will help fight the spread of the virus,” she said. “It makes little sense when the virus is already in the United States.”
The move is set to decimate spending by European tourists in the United States. In March 2019, European visitors to the country accounted for 29% of arrivals and $3.4 billion of spending, the U.S. Travel Association said.
“Temporarily shutting off travel from Europe is going to exacerbate the already-heavy impact of coronavirus on the travel industry and the 15.7 million Americans whose jobs depend on travel,” U.S. Travel Association President Roger Dow said in a statement.
Combined with a fresh U.S. State Department advisory asking citizens to reconsider global travel plans, the move could create chaos at European airports as passengers attempt a last-minute rush to fly before the U.S. ban takes effect.
(GRAPHIC: European airlines crater – here)
William Reinsch, a former senior U.S. Commerce Department official and fellow with the Center for Strategic and International Studies, said the restrictions would be “enormously disruptive” to airlines, hotels and restaurants already taking a hit because many Americans are staying home.
“I think the administration will be forced to provide some relief to the airlines,” he said.
Among U.S. carriers, American Airlines could be relatively spared because of its alliance with British Airways and higher share of UK traffic.
Air France-KLM partner Delta Air Lines and Lufthansa ally United Airlines are bound to suffer more, independent aviation analyst Mike Boyd said. “But the fact is that with the news of the spread of the virus in Europe, the flights would be empty anyway.”
American Airlines said it was in contact with the U.S. government to understand and comply with the directive.
Delta said it would waive reservation change fees for customers traveling to, from or through Europe and Britain through May 31. United did not respond to requests for comment.
Reporting by Lisa Baertlein in Los Angeles, Laurence Frost in Paris and David Shepardson in Washington; additional reporting by Jamie Freed in Sydney, Sayantani Ghosh in Singapore, Tracy Rucinski in Chicago and Andrea Shalal in Washington; Writing by Jamie Freed; Editing by Kenneth Maxwell and Mark Potter