Monday 16 March 2020 8:40 am

Airline stocks in freefall as travel restrictions take hold

Virgin Atlantic, Easyjet and British Airways owner are scaling back flights after a number of countries imposed travel restrictions amid the coronavirus outbreak.

British Airways owner, International Consolidated Airlines Group (IAG) and Easyjet will ground aircraft on an unprecedented scale in an attempt to mitigate the effect of the travel restrictions.

Virgin Atlantic said it will cut flights by 80 per cent as it tackles the coronavirus outbreak. The airline has also asked staff to take eight weeks of unpaid leave.

Read more: Business on the brink: Airlines, hospitality and train operators in line for state support

The government said it would discuss how to protect the aviation industry amid the outbreak after Easyjet joined Virgin Atlantic in calling for help as people across the world stop traveling.

General secretary of the British Airline Pilots Association (BALPA), Brian Strutton, said: “The UK aviation industry supports around half a million jobs – while times are tough for the industry and no doubt jobs will be affected in the short-term, if the industry is left to crumble entirely the long-term impact on our economy could be devastating.”

“The effect may be temporary but we are facing a near total shutdown of UK aviation for the next two months at least. Airlines cannot survive that without help and government needs to step in now with guarantees and funding.”

In a statement, Easyjet said: “European aviation faces a precarious future and there is no guarantee that the European airlines, along with all the benefits it brings for people, the economy and business, will survive what could be a long-term travel freeze and the risks of a slow recovery.”

It said it could not provide financial guidance amid the uncertainty.

Stocks plunged on open as the markets reacted to the news. Easyjet tumbled more than 30 per cent while IAG fell 26.52 per cent.

Easyjet’s chief executive Johan Lundgren said: “We continue to operate rescue and repatriation flights to get people home where we can, so they can be with family and friends in these difficult times.”

Airline stocks have taken a beating in the last few weeks as the spread of the coronavirus worsened.

IAG has delayed the retirement of chief executive Willie Walsh as it plans for a 7.5 per cent drop in flights. He was due to step down in June but these plans have reportedly been delayed for a “few months”.

Read more: FTSE 100 tumbles despite Fed’s dramatic coronavirus intervention

Walsh said: “We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer.”

“We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary.”

A number of countries, including the US and Italy, have imposed travel restrictions in a bid to curb the spread of the coronavirus. Over the weekend US President Donald Trump extended his travel ban to include the UK, as the number of confirmed coronavirus cases rose to 1,372.

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