British Airways Plc fell the most since 2001 and Air China Ltd. had the biggest drop in six months as airline stocks worldwide tumbled on concern that an outbreak of swine flu in Mexico will depress travel demand.
British Airways lost as much as 17 percent and Air China, the No. 1 airline by market value, sank 13 percent. Iberia Lineas Aereas de Espana SA, which has 12 weekly flights to Mexico, fell 8.6 percent and shares of American Airlines parent AMR Corp. declined 8 percent in European trading.
Airlines that are already losing custom because of the global recession face further declines as swine flu spreads. The disease has killed more than 80 people in Mexico and 20 in the U.S. have contracted it. The number is likely to rise, Dr. Richard Besser, acting chief of the Centers for Disease Control and Prevention, said at a White House briefing yesterday.
“At this point we don’t know how bad things are going to be, but the fear is that there’ll be a significant drop in air travel as people say ‘I don’t want to catch that,’” said Gert Zonneveld, a London-based analyst at Panmure Gordon with a “hold” recommendation on British Airways stock.
BA was trading down 7.4 percent at 151.7 pence as of 10:02 a.m. in the U.K. capital, where it is based. Europe’s third-biggest carrier is also the most reliant on travel to the U.S., which has declared a public-health emergency.
Beijing-based Air China closed down 51 cents at HK$3.49 in Hong Kong.Singapore Airlines Ltd., Asia’s most profitable carrier, fell 4.2 percent to S$10.16 in the city-state and Sydney-based Qantas Airways Ltd., Australia’s largest carrier, dropped 4 percent to A$1.90.
AMR Slides
AMR shares in Germany were priced at the equivalent of $4.95, compared with last week’s closing price of $5.42.
“It’s not surprising that there’s a rush to the door,” said Nick Cunningham, an analyst at Evolution Securities Ltd. in London. “There is clearly an enormous amount of earnings risk in airlines, and that was before this outbreak.”
Air France-KLM Group, Europe’s largest airline, fell 10 percent and was later down 8.6 percent at 8.21 euros in Paris, while Deutsche Lufthansa AG was off 3.1 percent at 8.65 euros after earlier dropping 7.4 percent. Madrid-basedIberia, with which British Airways plans to merge, was 7.9 percent lower.
“Swine flu poses a risk to global airlines as discretionary travel gets cut back even more,” said Ben Potter, a Melbourne-based analyst at IG Markets. “Customers look to avoid possible contact with infected persons and there’s the possibility governments may urge a cutback in flights to help control the spread.”
Tighter Checks
In Asia, Singapore has tightened checks at its main airport to screen arriving passengers against the flu outbreak, while authorities in Japan will examine flights from Mexico, where the disease was first detected.
American Airlines, Continental Airlines Inc. and other U.S. carriers are on “heightened awareness” for travelers with swine-flu symptoms, while maintaining flight schedules to Mexico, said Katherine Andrus, assistant general counsel for the Air Transport Association trade group in Washington.
Passengers are being given the option to rebook Mexico trips without penalties or fees, and U.S. carriers are awaiting further guidance from authorities including the World Health Organization, spokespeople for the companies said yesterday.
No Change
European airlines contacted by Bloomberg said they’ve yet to take any special measures. Iberia, the biggest European carrier to Latin America, said today that its Mexican flights are operating normally. British Airways will continue to fly to Mexico City four times a week and Air France is continuing services and has taken no steps related to the outbreak.
Cologne, Germany-based Lufthansa, Europe’s second-biggest airline, said the impact of swine flu seems unlikely to match that of Severe Acute Respiratory Syndrome, or SARS, which spread around the world in 2003 following an outbreak in China.
“Passenger behavior is unchanged,” Frankfurt-based spokesman Thomas Jachnow said today by telephone. “SARS was in a totally different league.”
Among airports, BAA Ltd., the owner of London Heathrow, Europe’s busiest, is working with the U.K. Health Protection Agency but hasn’t been advised of any need for changes, spokesman Stuart Butchers said today. Agency spokesmanDavid Daley confirmed that it’s not yet recommending extraordinary measures and that people who develop flu-like symptoms after travel should contact their local medical services.
Fraport AG, which runs Frankfurt airport, also said it won’t take special steps unless advised to do so by the German health authorities.
European discount carriers also fell, with Dublin-based Ryanair Holdings Plc, the region’s biggest, losing as much as 11 percent before trading down 4.6 percent at 3.29 euros. Luton, England-based EasyJet Plc dropped 6.3 percent and was later being priced 4.3 percent lower at 320.75 pence.
To contact the reporter on this story: Steve Rothwell in London atsrothwell@bloomberg.net.
By Steve Rothwell
http://www.bloomberg.com/apps/news?pid=20601102&sid=anCOXItkluhI&refer=uk
