Major International Airlines Collectively See Stock Plummet
Shares of Delta Air Lines and American Airlines simultaneously crashed with travel suspensions spread across the world. American Airline’s shares fell by -7.52%, Delta (DAL) shares decreased by -4.27%, and United Airlines (UAL) lost -5.16%.
Airline investors were devastated – predictions are that the coronavirus will eat away at the travel industry, harming both companies. Growing concerns of the outbreak’s spread into new regions at peak summer vacation season.
The US government raised its travel alert to “Level 4 – Do Not Travel” for some places in Italy. This comes after United Airlines limited flights in the full Asian continent.
In the coronavirus’s reign, it’s become increasingly clear that it damages important industries, and the act is another sign. Businesses are still ascertained of how far it would go and how long it will last.
Delta Airlines
Delta suspended flights to Milan’s Malpensa (MXP) airport on Sunday, with the last departing flight held on Monday morning. The last return flight will be on Tuesday, March 3.
The airline plans to resume services in Milan on the first week of May. Meanwhile, it will continue flights from New York and Atlanta to Rome.
After cutting its weekly number of flights to Seoul, South Korea, the company is left to contemplate its near-term future. The long-serving CFO is stepping down in a time of uncertainty and adverse markets.
Delta remains the best-run major US airline, even with earnings likely to get revised in the weeks to come.
American Airlines
Beforehand, American Airlines said it would stop flights to Milan from JFK and Miami through April 24.
Its Philadelphia-Rome flights will continue as the company allows a full refund for passengers not looking to rebook.
The airline has the highest debt burden among the three, or at least above most. It went into 2020 with the intention to lessen its debt, especially during the Boeing 737 MAX debacle.
Recent times might call for a deeper hole to fill. Profits for the year might get hit due to health concerns as America takes longer to recover.
Earnings for American Airlines are likely to come lower than expected this year. Fortunately for the company, the business remains healthy enough to overcome a poor summer season.
United Airlines Holdings
Prior to this decision, United Airlines Holdings (NASDAQ:UAL) suspended all service to Asia. It’s the most comprehensive pulldown by a US airline to date.
It’s a devastating cut, as United gets about 10% of its revenue from Asia, the most among major US airlines. It had to withdraw its 2020 guidance due to uncertainties amid declining Chinese near-term demands, which recently reached 100%.
In addition to that, about 15% of its capacity is tied to the region, in comparison to 9% for Delta. American Airlines Group, on the other hand, has 6%.
