Few industries were hit harder than the travel sector over the past week. Panic over the global outbreak of the COVID-19 coronavirus ravaged markets worldwide. Analysts and economists are expecting that individuals will curb their travel plans over the next few months.
Obviously, this is bad news for the airline industry. Carriers around the world are cutting routes in response to the outbreak. British Airways and Ryanair announced flight cuts on Monday.
Looking back at history, airliners took half a decade to return to profit after the 2001 terror attacks. U.S. airliners were some of the hardest hit after the 2001 attacks, and there are indications that the backlash from this crisis could also be very damaging.
American Airlines (NASDAQ:AAL) is the world’s largest airline by fleet size and revenue. Its shares have plunged 25% over the past week as of close on March 2. U.S. indices enjoyed a record rebound on March 2, but airline stocks remained in the red. Shares of American Airlines dropped 1% on the same day.
Southwest Airlines (NYSE:LUV) did not fare much better. Its stock has fallen 13% week over week. However, its shares did bounce back to rise 1.65% in yesterday’s trading period. Airlines like Southwest have moved to offer waivers amid travel concerns.
It is unlikely that this outbreak will have the long-lasting impacts that the 2001 terror attacks had on the airline industry. However, in the near term investors should expect airliners to take heavy hits as travel is significantly curbed.
