Airlines Fall on Concern Paris Attacks to Leave Lasting Mark
Published on Nov 16 2015 12:51 PM in General Industry
Airline and transport stocks slumped across Europe amid concern that the Paris terror attacks will have a long-term impact on tourism and business travel, adding to the woes of an industry already und...
Airline and transport stocks slumped across Europe amid concern that the Paris terror attacks will have a long-term impact on tourism and business travel, adding to the woes of an industry already under pressure after the downing of a passenger jet over Egypt.
Accor, Europe’s top hotel operator and based in the French capital, fell as much as 9.3 per cent, Air France-KLM Group and Aeroports de Paris both lost 7.2 per cent and Channel Tunnel operator Groupe Eurotunnel SE slipped 5.1 per cent.
France has shuttered cultural and tourist sites in the wake of what French President Francois Hollande said was “an act of war” by Islamic State. Friday’s attacks, which have claimed 129 lives so far, come 11 months after extremists targeted satirical magazine Charlie Hebdo and amid growing evidence that a bomb downed a Metrojet flight in Sinai two weeks ago, killing 224.
“We observed tragic events in Paris, and the crash of the airplane over Egypt,” Alexey Mordashov, the largest investor in Germany-based TUI AG, Europe’s No. 1 tour operator, told Bloomberg Television at the G20 meeting in Turkey the day after the attacks. “It will definitely have some impact on tourism, but it’s too early to judge.”
TUI fell as much as 5.7 per cent, while Thomas Cook Group lost 5.1 per cent.
Both Air France and Eurostar International, which operates express trains to Paris from London, noted a decline in travel following the Charlie Hebdo attacks in January, and “the same is expected to be the case as a result of Friday’s events,” Goodbody analyst Mark Simpson said in an investor note.
“Hotels, restaurants, travel agencies as well as other companies in the tourist industry will see a drop in demand, in France but also in other countries targeted by Islamic State,” John Plassard, a senior equity-sales trader at Mirabaud in Geneva, said by phone.
UK airline EasyJet, which has been evacuating 4,000 passengers from the Egyptian resort of Sharm el-Sheikh after Britain banned scheduled services on Nov. 4 following the Metrojet tragedy, deploys 20 of its capacity in France and saw its shares decline as much as 3.5 per cent.
IAG , parent of British Airways, whose key trans-Atlantic routes are heavily dependent on business and tourist visits to Europe from the US, fell 4.4 per cent and Germany’s Deutsche Lufthansa slumped 4.5 per cent.
Still, carriers aren’t likely to react to the Paris atrocities in the way they responded to the Metrojet crash - which could have been caused by a bomb planted at Sharm el- Sheikh airport - Turkish Airlines Chief Executive Officer Temil Kotil said in an interview. His company is among several to have suspended flights there.
“Turks will continue to go to Paris,” Kotil said at the G20 event. “I will continue to go to Paris as it is, no problem. I know the danger, I go myself, I bring my kids. Individual cases, the French authorities are strong enough to sort them out if there is a repeat.”
Aeroports de Paris, which owns the French capital’s Charles de Gaulle hub, said additional security measures are adding about an hour to the travel time for outbound passengers.
The UK announced plans to double spending on aviation security Monday. Prime Minister David Cameron has also ordered a review of security at foreign airports, particularly those in the Middle East and North Africa.
News by Bloomberg, edited by Hospitality Ireland