Yahoo Finance Airline stocks hit hard in wake of Russia’s invasion
Airline stocks took a deep dive as Russia’s invasion of Ukraine hit the travel and leisure sector.
International Consolidated Airlines Group (IAG.L), the owner of British Airways has dropped by around 12% this week, while Easyjet (EZJ.L) fell 9%. Wizz Air (WIZZ.L), which has extensive operations across Eastern Europe, nosedived over 18% since Monday.
Airlines have been left scrambling to raise cash as the pandemic caused travel demand to evaporate. There has been a gradual uptick but investors fear that renewed optimism of the travelling public will be severely dented with war in Ukraine underway.
Read more: BA owner IAG's profit outlook dependent on Ukraine developments
AJ Bell investment director Russ Mould said: “The airline sector has been waiting a long time for its big comeback and every time it looks as if there are clear skies along comes something else to stop the recovery.
“COVID’s multiple variants have weighed on sentiment towards wanting or being permitted to fly, which has put a lot of financial pressure on airlines. Now we have the war between Russia and Ukraine making some people nervous about wanting to get on a plane again.”
Russia’s civil aviation authority Rosaviatsiya has banned UK flights to and over Russia in retaliation for the British ban on Aeroflot flights, PA reported.
Rosaviatsiya said that all flights by UK carriers to Russia as well as transit flights had been banned as of Friday.
It said the measure was taken in response to the “unfriendly decisions” by the British authorities who banned flights to the UK by Russian flag carrier Aeroflot as part of sanctions over Russia’s invasion of Ukraine.
Read more: How Russia's war on Ukraine is impacting stock prices
Virgin Atlantic said on Friday it would avoid Russian airspace, meaning flights between Britain and India and Pakistan would take slightly longer.
Surging oil prices are also not helping recovery in the sector, potentially exacerbating the issue of rising fuel costs for airlines if prices remain elevated. Brent crude futures and West Texas Intermediate (WTI) futures both topped $100.
Brent crude (BZ=F) rose 2.4% to $101.24 (£75.68) a barrel this Friday. The oil benchmark topped $100 a barrel in intraday trading in the previous session, breaching that level for the first time since 2014.
US West Texas crude (CL=F) soared to $94.23 a barrel, up 1.6%.
