Airline stocks from both the US and the UK plunged as health experts are worried over the COVID delta variant. On Monday, both American Airlines and United Airlines were down by more than 6%. Also, Delta Air Lines was down by 5% while Southwest was also down by almost 5%. The same can be said for the airline industry’s counterpart in the UK. EasyJet was down by 6% while IAG dropped by 4% and TUI and Jet were down by more than 3%.
Airline Stocks and Delta Variant Concerns
In the UK, airline stocks lost around 20% in the last three months as new variants may have crushed the dream of the travel sector to ease restrictions. Last Friday, the UK scrapped its initial plan to ease COVID rules for fully vaccinated travelers from France.
According to Goodbody analysts, there are “fears that Spain and Greece could be similarly treated”. Spain was UK traveler’s top destination while France is on number 2.
In the US, despite the growing number of travelers, airline stocks dropped as the cases of delta variant rise. The Transportation Security Administration screened more than 2.2 million air travelers last Sunday.
So what made investors become hesitant despite travel volume making a comeback? Though domestic leisure travel is back to 2019 levels, business and international travel remain low. That’s bad news for American, Delta, and United that expect sizeable profits from both international and business travelers.
The delta variant is now causing world health leaders to be concerned. According to the World Health Organization, the delta variant caused the death toll to rise worldwide after a brief period of decline. Also, in the US, the daily rate of new infections doubled in the last two weeks.
Could airlines expect worse in the coming weeks or months? Airlines are currently hiring to meet the demand in travel. But given the recent developments and spread of the delta variant, could we expect stricter restrictions?
