£15 billion airline rout: BA owner IAG and Easyjet among shares hammered as coronavirus crisis clobbers the travel industry
Major airlines have seen more than £15billion wiped off their value in just six days as coronavirus clobbers the travel industry.
Efforts by central banks to reassure investors’ frayed nerves helped prop up the FTSE 100 yesterday.
But it was not enough to prevent another rout on airline stocks, as shares in British Airways owner IAG plunged another 8.2 per cent.
Nosedive: Shares in British Airways owner IAG plunged another 8.2 per cent yesterday as the worsening coronavirus outbreak wreaked havoc on the travel industry
It means 30 per cent – some £3.8billion – has been wiped off the aviation giant’s value in just six days of trading.
Easyjet was also among the FTSE fallers, and like IAG is now worth 30 per cent less than when the markets opened last Monday.
Dart, the owner of Jet 2, fell 9 per cent yesterday, meaning the company has lost 41 per cent of its value in just over a week.
As BA and Ryanair cancelled hundreds more flights, one analyst described airline stocks as ‘in the doldrums’, while another warned they could thwart any recovery in the stock market.
On another turbulent day for the travel industry, the Bank of England attempted to calm investors reeling after the worst week on the stock markets since the financial crisis.
Echoing statements from other central banks, including the US Federal Reserve, it said it was working to ‘ensure all necessary steps are taken to protect financial and monetary stability’.
The statement appeared to provide some consolation to investors as the FTSE 100 edged up 1.1 per cent or 74 points to 6654.89.
Hoarders lift Ocado shares
Ocado shares jumped after it revealed that customers worried about coronavirus are stockpiling food and other goods.
Investors piled in after the online supermarket emailed customers to advise them to place orders further in advance because of ‘exceptionally high demand’.
It added: ‘More people than usual seem to be placing particularly large orders.’
Bernstein food retail analyst Bruno Monteyne said: ‘If a major outbreak happens, that will quickly lead to panic buying, empty shelves and food riots.’
Having warned last week that bookings will be hit by the coronavirus outbreak, BA announced it is cancelling another 204 flights between March 17 and 28.
This includes flights from London Heathrow and Gatwick to New York’s JFK airport and much of Europe, including France, Italy, Switzerland, Belgium, Germany, Ireland and Austria.
Ryanair also announced it is cancelling up to a quarter of its flights to and from Italy, which has been badly affected by the Covid-19 outbreak.
It said there had been a ‘significant step up in passenger no shows’. The budget airline said there had been a ‘notable drop in bookings’ but that it was too early to tell what impact the deadly disease would have on its earnings.
Michael Hewson, chief market analyst at CMC Markets UK, warned airlines and travel companies could hold back a wider stock market recovery.
He said: ‘For this rebound to stick you really need to see a rebound in travel and leisure.’
Titan £100m sale on hold
Over-50s group Saga has postponed the sale of one of its biggest holiday businesses because of the coronavirus travel chaos.
Saga has put on hold an auction of Titan Travel, which several private equity firms had looked at.
Titan provides escorted holidays to countries such as the US and Egypt, and is thought to be worth more than £100million.
The tourism sector has been pummelled by the virus crisis. Saga is already under fire after activist investor Elliott Advisers took a 5 per cent stake in the group last year.
The US group wants Saga to separate its tourism arm from its financial services business.
Holiday giants face knockout
Fallout from the stock market collapse looks set to trigger a shake-up in the blue-chip FTSE 100, with Tui and Carnival facing relegation.
The next reshuffle of FTSE 100 members, based on their market value, takes place on March 23, but the moves are based on the closing price of shares tonight.
Shares in travel company Tui have fallen 32 per cent in six days, while cruise firm Carnival has seen its value fall 25 per cent. The companies have been hammered by a slump in demand for holidays as worried families abandon travel plans.
Troubled healthcare group NMC also looks set to be booted out the FTSE 100 after its shares collapsed amid an accounting scandal.