Airlines and travel companies bore the brunt of the latest chaos on global markets as the spread of the coronavirus triggered more panic-selling.
At the end of the biggest weekly rout in share prices since the financial crisis, the boss of British Airways owner IAG warned the deadly outbreak could push struggling airlines ‘over the edge’.
The comments came as Easyjet reported a big drop in demand for flights in and out of Italy, Finnair warned profits could be hit and United Airlines cut services to Japan and South Korea.
At the end of the biggest weekly rout in share prices since the financial crisis, the boss of BA owner IAG warned the deadly outbreak could push struggling airlines ‘over the edge’
As shares tumbled around the world – taking losses this week to £4.6trillion – IAG fell another 8.4 per cent while travel agent Tui was down 8.5 per cent.
IAG, which owns Iberia, Vueling and Aer Lingus alongside BA, has lost almost a quarter of its value, or £3billion, since markets opened on Monday.
Tui has fallen nearly 30 per cent this week while Easyjet has shed 27 per cent and Ryanair 20 per cent.
Shares in European rivals Lufthansa and Air France have also plunged more than 20pc this week.
‘Airlines are clearly scared stiff of losing their summer season in Europe,’ said Neil Wilson, chief analyst at Markets.
Yesterday, IAG and Easyjet issued updates to investors, bracing them for more pain as bookings fall.
IAG chief executive Willie Walsh said that flight suspensions to China and cancellations on Italian routes would reduce the amount of passengers it carries this year.
He added that business travel had been affected as conferences have been cancelled and work trips delayed.
Walsh insisted IAG was strong enough to withstand this shock, but predicted it would be too much for some other airlines.
On BBC Radio 4’s Today programme, he said some airlines would be ‘pushed over the edge’. He added: ‘We are well able to adjust to this situation because our business is in great shape.
‘It’s the failing airlines who will be most affected by this. So without question, there will be more consolidation as a result.’
The comments came as the Geneva Motor Show, scheduled for Zurich next week, became the latest business summit to be cancelled.
There are growing fears that the Summer Olympics in Tokyo – another key destination for BA – could be another casualty of the outbreak.
The International Air Transport Association has estimated the potential cost of the outbreak to the aviation industry at £22.6billion.
Following an increase in coronavirus cases in Italy, Easyjet has cancelled some flights, particularly into and out of the north of the country.
The airline said it would slash costs by offering staff unpaid leave and freezing recruitment, promotion and pay.
The warning from airlines came as the FTSE 100 index yesterday fell another 3.2 per cent – or £54.2billion – to hit its lowest level since July 2016, shortly after the European Union referendum.
It has shed 11.1 per cent, or £206.6billion, of its value since markets opened on Monday morning.
The weekly rout on the blue-chip FTSE 100 is the third- biggest on record, after the credit crunch in 2008 and Black Wednesday crash in 1987.
Meanwhile the FTSE 250, which contains more UK-focused companies, dropped another 2.3 per cent, or £8.2billion.
It has shed £44.4billion, or 11.3 per cent, of its value this week.
No sectors have proved immune. Analysis published yesterday calculated that 132 listed UK companies, from miners to luxury retailers and brewers, have warned their earnings will be hit this year.
According to the report by Bowmore Asset Management, the number of companies that have sounded the alarm has more than doubled to 62 this week, from 28 last week.
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