Coronavirus Sell Off Crushing Airline Stocks (Delta Airline, American Airline, United Airline)

Following President Trump’s travel ban announcement last Thursday, airline stocks have tumbled. The travel ban placed a 30-day travel restriction from some European countries (the Schengen Area) excluding the UK as an attempt to prevent further spreading of the coronavirus in the US.

Many airlines’ stocks have since plunged after thousands of flight cancellations following the travel ban and some airline companies are at the point of laying off some of their employees. Jacob Schram, CEO of Norwegian Air, in a statement, said: “We urge international governments to act now to ensure that the aviation industry can protect jobs and continue to be a vital part of the global economic recovery.” This was in response to issues surrounding the airline company.

The Norwegian Air airline company which was already had a heavily indebted budget was the first stock to respond to the effect of the travel ban. The airline said it suspended over 4,000 flights and would temporarily lay off half of its employees after its stock plummeted 22% last Thursday.

Delta Airlines is also threatened as there are high tendencies of the airline company to shrink its flight coverage about 70% with its stock plummeting to the lowest levels since 2013. The airline company made this announcement on Wednesday in hope that “demand starts to recover” in due time. Delta Airlines has reported that its expected sales for March would be short $2 billion compared to the previous year. It also reported that 80% of its international flying would be pulled off from its schedules within the next two to three months.

Other airline stocks like American Airlines (AAL) and United Airlines (UAL) have also plunged as a result of the coronavirus pandemic and the Trump travel ban. On Tuesday, United Airlines cut its schedules by 60%. Southwest Airlines (LUV), earlier this week withdrew its financial forecast for the year.

The US travel ban caused other countries to also impose a travel ban on ‘hotspot’ areas. The travel ban isn’t the only factor that has caused a decline in the airline industry, the fear surrounding the coronavirus has also restricted the movement of many individuals despite discounted airline travel prices. The coronavirus pandemic has caused the airline industry to plunge drastically for the first time since the 9/11 attacks.

Many airline companies have been forced to make crucial changes to their operations as the coronavirus pandemic causes travel demand to decline. The industry has since faced sales loss in hundreds of billions of dollars.

In an attempt to salvage the airline industry, the Trump administration planned to offer $50 billion in loans. However, the airline industry group has asked for more aid to support the industry. In a memo released, Ed Bastian, Delta CEO with regard to the Trump administration’s offer said that the airline industry was still discussing the matter of industry support with the White House and Congress. Though President Trump had pledged to support the industry, they were yet to come to terms.