Airlines & Airports
Rising Airline Stocks Could Signal a Quick Rebound for Global Travel Industry
Airlines have had it good this year. Many have enjoyed record profits, and most people have forgotten the struggles, bailouts and bankruptcies that plagued the industry only a few years ago.
Things have changed in recent days, however. Investors in Asia and Europe, already skittish because of the Metrojet tragedy (which has now been ruled a bombing by Russian investigators), began selling off their airline stocks during trading on Monday in the wake of the Paris attacks.
Airline stocks take a hit in the short term
The general fear amongst investors is that people will not be willing to fly, especially abroad, in the short term. Markets were down in general on Monday, but travel-related shares were hit especially hard. For example, Japan Air Lines and ANA shares were both down more than 3 percent on Monday. Cathay Pacific, Asiana and Korean Air posted drops in the same range. Virgin Australia was down 6.5 percent. That is a steeper decline than Air France-KLM, which saw its shares fall 5.7 percent on Monday.
A quick rebound?
Tuesday’s trading sessions in Asia showed that any nervousness was short-lived. In Shanghai, Hong Kong and Tokyo, airline stocks rebounded after their dismal Monday performance.
Tuesday's markets were up in Europe, but, here (geographically closer to the recent tragic events in Paris) airlines still struggled. Easyjet shares, for example, were down 3 percent on Tuesday. However, the low-cost carrier also announced that it is going to go through with a plan to order 36 new airplanes. CEO Carolyn McCall explained that she feels that “people will want to continue to live their lives, and traveling is part of that… things will get back to normal in the medium to long term.”
Not the first time markets and travelers have had to deal with terrorism
If the markets and the opinions of airline execs are a mirror of the general sentiment of the traveling public, people are obviously still nervous, but not quite as nervous as they have been during past terror attacks. It took years for the airline industry to recover from 9/11. The travel sector also struggled after the 2004 Madrid subway bombings and 2005 London attacks. Early indications seem to suggest that things will get back to normal more quickly this time around.
Attempting to get "back to normal"
Even in Paris, the goal seems to be to return to normal as soon as possible. Landmarks like the Louvre and Eiffel Tower have been reopened. The atmosphere could hardly be described as normal because of the visible presence of heavily-armed military personnel and police.
Idealists might like to think that investors were heartened by the announcement that Paris would reopen its attractions so soon after the attacks. However, the jaded news watcher could just as easily say that markets have gotten used to such attacks and now understand the recovery process well enough to not be worried about the long-term effects of the Paris attacks on the travel industry.
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