US airlines stocks in tailspin as coronavirus travel ban kicks in
Boeing led a rout of US aviation stocks today as president Trump’s coronavirus travel ban battered the airline industry as markets opened across the Atlantic.
For the second day in a row the aerospace giant shed around 15 per cent of its value, whilst fellow international carriers American Airlines, Delta and United all suffered double-figure drops.
The 30-day restrictions, which apply to 26 EU member states but not the UK or Ireland, are set to deepen the woes for airlines, which have been struggling against the slump in demand caused by the disease for weeks.
The collapse came after European airlines suffered a similar fate this morning, with Norwegian Air hardest hit with a 20 per cent fall.
US markets are now on the brink of falling into bear market territory due to the travel ban.
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Boeing’s fall came after JP Morgan analysts cut their target price for Boeing stock by $160 to $210, giving up their buy rating for the first time in three years.
The move followed Boeing’s decision to freeze new hiring in order to preserve cash, as the combination of the coronavirus outbreak and the ongoing 737 Max grounding continue to weigh on the firm.
Several airlines, like Hong Kong’s national carrier Cathay Pacific, have asked to defer orders of Boeing’s planes, a key source of income for the plane-making giant.
Analyst Seth Seifman said: “Our desire to hang in with Boeing until the return of the 737 Maxhas worked out poorly, both regarding the timeline for re-certification and now more importantly with the impact of Covid-19 on aircraft demand”.
The firm indicated that it would draw down on the remainder of a $13.8bn loan it agreed last month to protect against the collapse.