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‘Massive Shock’ and Battered Airline Stocks in Europe With Trump’s Travel Ban ‘Massive Shock’ and Battered Airline Stocks in Europe With Trump’s Travel Ban
(about 5 hours later)
President Trump’s abrupt decision to shut America’s borders to most European travelers sowed chaos at the Continent’s airports and at travel-related businesses Thursday, as airlines scrambled to figure out how to halt flights to the United States and governments warned of potentially devastating financial costs. PARIS — President Trump’s abrupt decision to shut America’s borders to most European travelers sowed chaos at the Continent’s airports and at travel-related businesses Thursday, as airlines scrambled to figure out how to halt flights to the United States and governments warned of potentially devastating financial costs.
French Finance Minister Bruno Le Maire spoke of a “massive shock,” and European officials reacted angrily after Mr. Trump late Wednesday announced that he would suspend travel from Europe to the United States for 30 days starting Friday, with the exception of Britain. The State Department warned Americans that they should reconsider all international travel, the most severe caution it can offer short of “do not travel.” The French finance minister, Bruno Le Maire, spoke of a “massive shock,” and European officials reacted angrily after Mr. Trump late Wednesday announced that he would suspend travel from Europe to the United States for 30 days starting Friday, with the exception of Britain. The State Department warned Americans that they should reconsider all international travel, the most severe caution it can offer short of “do not travel.”
“The coronavirus is a global crisis, not limited to any continent, and it requires cooperation rather than unilateral action,” the European Commission said. “The European Union disapproves of the fact that the U.S. decision to impose a travel ban was taken unilaterally and without consultation.” “The European Union disapproves of the fact that the U.S. decision to impose a travel ban was taken unilaterally and without consultation,” the European Commission said.
The move hammered shares of European airline and travel stocks as the sector braced for a nearly unprecedented brake on activity. Air France, Lufthansa and IAG, the owner of British Airways and Iberia, fell as much as 13 percent. In early trading in the United States, American Airlines fell about 14 percent, and Delta Air Lines fell 12 about 12 percent. The move hammered shares of European airline and travel companies as the sector braced for a nearly unprecedented brake on activity. Stocks for Air France, Lufthansa and IAG, the owner of British Airways and Iberia, fell as much as 13 percent. In early trading in the United States, American Airlines fell about 14 percent, and Delta Air Lines fell about 12 percent.
“The impact will multiply very rapidly in the hours and days to come,” said Roland Héguy, president of the Umih, the French trade association of hotels and restaurants. “Many countries will be hit,” he said, adding that 95 percent of hotels, cafes and restaurants in France were already suffering revenue declines of up to 40 percent because of the coronavirus. The International Air Transport Association urged “emergency measures” for airlines, saying the ban on European nationals entering the United States would create enormous cash-flow pressures for carriers and “create negative consequences across the economy.”
Given how much economic damage has already been done in Europe from the epidemic, some economists said the travel ban, while shocking, would not meaningfully deepen the ongoing downturn — and might even help hasten a recovery. “Governments must recognize this and be ready to support,” Alexandre de Juniac, the association’s director general, said in a statement.
“Considering all the other restrictions on movement already in place in Europe, in and of itself the ban is not a huge economic event,” said Holger Schmieding, chief economist at Berenberg Bank. “You could even argue that it is a blessing in disguise if it has the effect of slowing the spread in the United States,” he said.
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At Charles de Gaulle airport in Paris, frantic passengers jammed the Delta Air Lines counter in the morning seeking return flights to the United States.
Salomé Carasco, an American studying in Paris, said her parents had called her at 2 a.m., soon after Mr. Trump’s announcement, asking her to return home. “I understand that they are trying to stop” the virus’s spread, she said, “but the reaction is intense.”
Air France, which operates 121 flights weekly between the United States, said on Thursday that it would fly only a handful of routes from Friday until March 28 and was working on a plan to operate beyond that. The French government said it was ready to provide state aid — an extraordinary step normally forbidden under European Union rules.
“The impact will multiply very rapidly in the hours and days to come,” said Roland Héguy, president of the Umih, the French trade association of hotels and restaurants. “Many countries will be hit,” he said, adding that 95 percent of hotels, cafes and restaurants in France were already suffering revenue declines of up to 40 percent because of the coronavirus.
Given how much economic damage has already been done in Europe from the epidemic, some economists said the travel ban, while shocking, would not meaningfully deepen the downturn — and might even help hasten a recovery.
“Considering all the other restrictions on movement already in place in Europe, in and of itself the ban is not a huge economic event,” said Holger Schmieding, chief economist at Berenberg Bank. “You could even argue that it is a blessing in disguise if it has the effect of slowing the spread in the United States,” he said.
Because the epidemic is a medical emergency, he added, the most important thing governments can do to to ensure economic recovery is to prevent the virus from spreading more widely, even if it inflicts financial pain on companies.Because the epidemic is a medical emergency, he added, the most important thing governments can do to to ensure economic recovery is to prevent the virus from spreading more widely, even if it inflicts financial pain on companies.
“At the moment, significant short-term economic costs should be incurred if it helps with the medical emergency.” he said. “If it slows the spread of the epidemic to give us enough time to cope, that would be very valuable.” “At the moment, significant short-term economic costs should be incurred if it helps with the medical emergency,” he said. “If it slows the spread of the epidemic to give us enough time to cope, that would be very valuable.”
Nonetheless, the abrupt travel ban threatened a further blow to tourism-dependent industries on both sides of the Atlantic Ocean, and added to the problems of world leaders trying to preserve jobs in the face of the relentless coronavirus outbreak. Nonetheless, the abrupt travel ban threatened a further blow to tourism-dependent industries on both sides of the Atlantic, and added to the problems of world leaders trying to preserve jobs in the face of the relentless coronavirus outbreak.
European airlines were already grappling with a mounting financial toll after curtailing flights Europe and to Asia. Lufthansa said Wednesday that it would cancel 23,000 flights across the group, a 50 percent reduction. European airlines were already grappling with a mounting financial toll after curtailing flights from Europe and to Asia, and had started cutting trans-Atlantic routes as travelers increasingly chose to stay home. Still, the industry will take an immediate hit. The International Air Transport Association on Thursday indicated that its estimate of a $113 billion decline in airline revenue from the coronavirus crisis was likely to rise.
The European Union, and countries including Italy, Germany and Britain, have pledged over 70 billion euros in aid this week alone to support health systems and prevent an economic domino effect as the coronavirus epidemic puts a chilling effect on businesses and the supply chain. The European Union, and countries including Italy, Germany and Britain, have pledged over 70 billion euros in aid this week alone to support health systems and prevent an economic domino effect as the coronavirus epidemic puts a chilling effect on businesses.
European officials are especially keen to avoid widespread layoffs at a time when Europe’s economic recovery has showed signs of faltering. They are aiming much of their financial firepower at supporting businesses with schemes to move workers to partial employment to minimize the risk of a spike in unemployment. But efforts to support businesses didn’t stop questions from swirling about the possibility of layoffs. Norwegian Air said it would temporarily lay off half its staff and cancel 4,000 flights until the end of May as the travel restrictions to the United States put “extra pressure on an already difficult situation.”
That didn’t stop questions from swirling Thursday about the possibility of layoffs. In Rome, Ciampino Airport, a hub for low-cost airlines, announced Thursday that it would shutter entirely as of Friday because of the outbreak. Rome’s Fiumicino Airport, which hosts international flights, is bracing for reduced activity, its operator said. In Rome, Ciampino Airport, a hub for low-cost airlines, announced Thursday that it would shutter entirely as of Friday because of the outbreak. Fiumicino Airport in Rome, which hosts international flights, is bracing for reduced activity, its operator said.
As passengers at Paris’s Charles de Gaulle airport rushed to book last-minute flights to the United States, Air France said it would decide later Thursday whether to maintain its service to the United States, which represent about a third of revenue. The French government said it was ready to provide state aid — normally forbidden under European Union rules — to help the carrier weather a potentially sharp financial hit. At the Paris airport, Nadia Hamnache, an employee at Safe Bag, a company that sells protective wrap for luggage, said there were already far fewer travelers, with up to 50 percent fewer people visiting shops in Terminal 2E, the hub for Air France and Delta flights. “We’re really afraid of a reduction or canceling of Air France flights, because that impacts us directly,” she said. “If the cancellation of flights continues, we’ll have a loss of revenue.”
At the airport, Nadia Hamnache, an employee at SafeBag, a company that sells protective wrap for luggage, said there were already far fewer travelers, with up to 50 percent fewer people visiting shops in Terminal 2E, the hub for Air France and Delta flights. “We’re really afraid of a reduction or canceling of Air France flights, because that impacts us directly,” she said. “If the cancellation of flights continues, we’ll have a loss of revenue.”
Employees were worried that they might be told to stay home, she added. “If we’re still paid, that’s OK, but if they don’t pay us that’s going to be a huge problem,” she said.Employees were worried that they might be told to stay home, she added. “If we’re still paid, that’s OK, but if they don’t pay us that’s going to be a huge problem,” she said.
In Spain, which has about 400 flights a week with the United States, the main airline association called for immediate financial help from the government. “Airlines are now in survival mode, facing a fall in demand that is without precedent,” Javier Gándara, the president of the Asociación de Líneas Aéreas, said in a phone interview.
European visitors to the United States, excluding those from Britain, totaled nearly 11 million in 2018, accounting for more than a quarter of all travelers. Travel and tourism between the United States and Europe, including areas not covered by the ban, is a business totaling roughly $130 billion annually, according to U.S. data.European visitors to the United States, excluding those from Britain, totaled nearly 11 million in 2018, accounting for more than a quarter of all travelers. Travel and tourism between the United States and Europe, including areas not covered by the ban, is a business totaling roughly $130 billion annually, according to U.S. data.
Airlines had already been cutting routes across the Atlantic as travelers increasingly chose to stay home. Still, the industry will take an immediate hit.
Air France KLM’s revenue from North American business, which includes destinations outside the United States, totaled $4 billion last year, or about 13 percent of its sales. Lufthansa’s totaled $3.7 billion for the first nine months of last year, or about 15 percent of its sales.
United Airlines and Delta Air Lines both reaped about $7.4 billion from flights over the Atlantic last year, which includes business beyond the countries affected by Mr. Trump’s order. For United, that totaled 17 percent of revenue. For Delta Air Lines, it represents about 15 percent.
Travel agencies and tour operators also scrambled for solutions to withstand the impact.Travel agencies and tour operators also scrambled for solutions to withstand the impact.
“It’s absolutely catastrophic,” said Jean-Pierre Mas, president of Entreprises du Voyage, a union representing the main French tour operators.“It’s absolutely catastrophic,” said Jean-Pierre Mas, president of Entreprises du Voyage, a union representing the main French tour operators.
Mr. Mas said that the United States was the most popular non-European destination for French tourists and business people. Every year about 1.8 million French citizens visit the U.S., with a specific preference for March and April, when about 400,000 French fly to the U.S. Mr. Mas said that the United States was the most popular non-European destination for French tourists and businesspeople. Every year about 1.8 million French citizens visit the United States, with a specific preference for March and April, when about 400,000 French fly to the United States.
Mr. Mas condemned the “irrational attitude of Trump who thinks that he is protecting his country by barricading it” and said that he was worried such a ban would prompt other countries to follow suit. “This attitude will go viral in the coming days, if not hours,” he said.Mr. Mas condemned the “irrational attitude of Trump who thinks that he is protecting his country by barricading it” and said that he was worried such a ban would prompt other countries to follow suit. “This attitude will go viral in the coming days, if not hours,” he said.
Aéroports de Paris, the company that runs the two main international airports in Paris, said it was still planning its response to the ban and could not give specific details about its impact.Aéroports de Paris, the company that runs the two main international airports in Paris, said it was still planning its response to the ban and could not give specific details about its impact.
“But it’s a catastrophe, for all travel and tourism sectors, for airline companies, for hotels,” said Sonia Gacic, a spokesperson. “But it’s a catastrophe, for all travel and tourism sectors, for airline companies, for hotels,” said Sonia Gacic, a spokeswoman.
Constant Meheut and Eva Mbengue contributed reporting from Paris. Jack Ewing contributed reporting from Frankfurt. Ben Casselman contributed reporting from New York. Reporting was contributed by Alexandra Stevenson from Hong Kong, Niraj Chokshi and Ben Casselman from New York, Constant Méheut and Eva Mbengue from Paris, Jack Ewing from Frankfurt, and Raphael Minder from Madrid.