Europe’s airlines hit by turbulence in US
EUROPEAN airline shares followed US counterparts in a downward spiral yesterday as investors’ confidence in the sector ebbed away.
International passenger numbers across airlines dropped in August, a month that traditionally provides a boost with summer holidays in full swing.
Air France-KLM was down more than nine per cent as the sector took a hammering amid gloomy forecasts on world growth.
International Airlines Group – which encompasses BA – was off by more than three per cent as the grim trend spread across the major carriers.
Even budget carriers were hit, with Ryanair dropping close to four per cent and easyJet falling 1.5 per cent.
Shares in American Airlines’ parent company AMR nosedived by a third on Monday amid fears that the carrier may be forced into Chapter 11 bankruptcy protection.
Under Chapter 11 a company can enter bankruptcy on its own terms.
Yesterday its shares recovered slightly from a 41 per cent slump on Monday, which triggered automatic halts in trading.
Rumours about a possible restructuring appear to have sparked the sell-off, including reports that a large number of pilots were retiring early in case a filing affected their retirement plans.
Fears of a second recession in the US also contributed towards the share drop, which affected other airline shares.
Delta Air Lines shares rose around four per cent yesterday, after an 11.3 per cent fall, while United Continental was flat in the wake of Monday’s 11.7 per cent drop.
AMR said there was “no company-driven news that caused the volatility” and described market about bankruptcy as “rumours and speculation”. The Texas-based carrier maintains that it does not want to file for bankruptcy protection.
Earlier in the week the International Air Transport Association said the total passenger market was down 1.6 per cent while cargo was down 1.3 per cent compared with July.