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Airline Shares Drop Sharply After Trump Imposes Travel Limits

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Airline stocks tumbled on Thursday after President Trump prohibited most travelers from 26 European countries from visiting the United States for 30 days.

The three big U.S. carriers that fly trans-Atlantic routes — United Airlines, Delta Air Lines and American Airlines — fell by 10 percent or more in morning trading.

Already reeling from a steep decline in bookings because of the coronavirus outbreak, the airlines now stand to lose millions of dollars in revenue from trans-Atlantic flights, which account for a big chunk of their international business.

Over the next four weeks, the ban will result in the cancellation of more than 6,700 flights, the equivalent of two million seats, in each direction, according to an analysis by OAG, an aviation data provider.

Delta is the airline most hurt by the ban, operating 17 percent of affected flights, according to OAG. United is next, with 14 percent, followed by Lufthansa, with 13 percent. American ranked fourth, operating about 8 percent of affected flights.

Confusion reigned after Mr. Trump’s announcement, with frantic travelers struggling to understand the consequences of the ban and airlines racing to adjust operations on little notice ahead of its implementation on Friday night.

“This action will hit U.S. airlines, their employees, travelers and the shipping public extremely hard,” said Nicholas Calio, president of Airlines for America, an industry group. “However, we respect the need to take this unprecedented action and appreciate the administration’s commitment to facilitate travel and trade.”

But others in the industry were more critical. Sara Nelson, the president of the Association of Flight Attendants, the union representing workers at United, said in an interview that the airline industry was “pretty blindsided” by Mr. Trump’s announcement.

“It created total pandemonium,” Ms. Nelson said. “Airline employees had no idea what this meant and for some it was completely disrupting their lives. They weren’t even sure if they were going to have a job in the next 24 hours or get home.”

Among flight attendants, there is widespread fear about job losses, she added. “The trajectory that this is on right now is beyond job loss, it’s about whether or not the industry can actually operate,” Ms. Nelson said. “You can’t operate a flight when no one wants to be on it.”

Even before the ban, investors were reassessing the financial prospects of airlines, several of which sought bankruptcy protection in the last two decades.

“The airlines are in cash preservation mode, and we fully expect to see credit facilities extended and increased in the next week,” Helane Becker, an airline analyst with Cowen, wrote in a research note on Thursday. “We previously stated U.S. airline bankruptcies were unlikely and in the near-term that still remains the case BUT if bookings do not improve in the next three months things could deteriorate quickly.”

United borrowed $2 billion this week and Delta raised $1 billion last week. American raised $500 million two weeks ago.

Delta said on Wednesday night that it would waive change fees for all customers traveling to, from or through Europe and the United Kingdom through May. American Airlines, which operates 15 daily flights from the parts of Europe affected by the ban, said that it was “committed to taking care of any affected customers by assisting them with rebooking” and that it was reaching out to those affected.

Travel and tourism between the United States and Europe, including areas not covered by the ban, is a business totaling roughly $130 billion annually, according to U.S. data.

Trans-Atlantic flights accounted for about 17 percent of United’s 2019 passenger revenues, or $7.3 billion. For Delta, the share was 15 percent, or $6.3 billion, and for American it was 11 percent, or $4.6 billion.

European airline stocks also fell sharply. And shares of the aircraft manufacturer Boeing, which has also been hurt by the grounding of the 737 Max and cutbacks in orders, were down 12 percent on Thursday after dropping 18 percent on Wednesday.

In addition to Mr. Trump’s travel ban affecting the 26 European countries that make up the Schengen Area, the State Department warned Americans that they should reconsider all international travel, the most severe caution it can offer short of “do not travel.”

Natalie Kitroeff contributed reporting.


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