PARIS/LOS ANGELES (Reuters) – Airlines bore the brunt of a dramatic expansion of the coronavirus crisis on Thursday, as U.S. travel curbs on much of continental Europe deepened the sector’s misery and piled more pressure on governments to offer emergency support.
The 30-day restrictions will badly disrupt transatlantic traffic key to the earnings of major European carriers and their U.S. airline partners, analysts warned, as the move hit travel stocks already battered by the virus outbreak.
Those routes account for 20-30% of large European operators’ revenue and a majority of profit, Credit Suisse analyst Neil Glynn warned, “highlighting the damage to revenue lines for the coming weeks and potentially well into the summer.”
Glynn added: “A ban on travel to the U.S. will likely mean heavier cuts” than the drastic capacity reductions already ordered as airlines scrapped flights – first to China and then to other destinations including Italy as the virus spread.
Shares in European and U.S. airlines slumped in turn to new lows, with Delta (DAL.N) and United Airlines (UAL.O) down more than 13% and American Airlines (AAL.O) 7.2% lower.
Air France-KLM (AIRF.PA) was down 9.1% at 1506 GMT, with British Airways parent IAG (ICAG.L) down 10.7% and Lufthansa (LHAG.DE) 11.5% lower. Troubled Norwegian Air (NWC.OL) and U.S.-dependent Icelandair (ICEAIR.IC) both plunged more than 20%.
The U.S. curbs on travel from the 26-country Schengen Area – which excludes Britain and Ireland – are similar to restrictions on China that took effect on Feb. 1 and do not apply to U.S. residents or their immediate family.
“The ban effectively stops travel from the Schengen Area to the USA,” said Bernstein analyst Daniel Roeska – predicting a “more substantial” earnings impact than European carriers had suffered from the earlier China flight suspensions.
U.S. airlines had already cut flight schedules to Italy and will take another hit from lower demand for flights from major destinations