Source : Financial Times
EasyJet and Ryanair led a plunge in European airline shares on Monday, as an outbreak of coronavirus in Italy ignited fears that travel across the continent will grind to a halt.
The airlines and hotel sectors most exposed to Europe were the hardest hit on a day marked by steep falls on stock markets from London to Milan. By early afternoon in London easyJet shares were down 15 per cent, Ryanair stock had dropped 12 per cent and Accor, one of Europe’s largest hotel groups, was down 6.3 per cent.
“What had been priced in by the market so far was weakness in China and a little bit of spillover into Asia Pacific from concerns about Chinese tourists not travelling so much,” said Harry Martin, a leisure analyst at Bernstein. “But today the panic is if we are going to have a global slowdown in travel.”
The concern in markets came even as Brussels said it had no plans to suspend the continent’s Schengen free travel zone and warned against a “panic” reaction to the news that Italian authorities had quarantined at least 10 towns in the north of the country. The threat of disruption to European travel comes on top of the slowdown hoteliers and airlines have faced in China, the epicentre of a virus that has already claimed more than 2,500 lives.
“If [coronavirus] spreads further — say more widely into Europe — then we believe travel and lodging companies would be among the first to experience subdued earnings and cash flows,” analysts at rating agency S&P Global noted.