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Norwegian airlines shares plummet as coronavirus hammers travel sector Lufthansa plans to cancel half its flights and may ground all superjumbos
(about 5 hours later)
Airline’s shares have fallen 70% in under a month as analysts point out weak cash reserves Norwegian shares plummet as German flag-carrier warns bookings are down everywhere
Shares in Norwegian fell by more than a quarter on Friday amid investor fears over the airline’s resilience amid the coronavirus outbreak. German airline Lufthansa is planning to slash half of its flights and is considering grounding its entire fleet of A380 superjumbos, as the fallout from the coronavirus continues to hit the global air travel industry.
The sell-off came as analysts warned that the airline’s cash reserves were slim. On Thursday, shares had already tumbled as the budget carrier withdrew its profits forecasts from last month and cancelled 22 transatlantic flights in the spring due to reduced passenger demand. The company, which includes Swiss International Air Lines and Austrian Airlines, said it was considering temporarily grounding its entire fleet of 14 Airbus A380 superjumbos in Frankfurt and Munich.
It will cut up to half its flights from April in response to a drastic decline in air travel bookings as the number of coronavirus cases around the world grows daily.
“In recent days, the Lufthansa Group has been exposed to drastic declines in bookings and numerous flight cancellations due to the spread of the Covid-19 virus. All traffic areas are now affected,” it said in a statement.
The latest drastic cutback comes just two days after the company said it be grounding about 20% of its fleet.
“In recent days, the Lufthansa Group has been exposed to drastic declines in bookings and numerous flight cancellations due to the spread of the COVID-19 virus. All traffic areas are now affected,” it said in a statement.
Earlier on Friday shares in rival airline Norwegian fell by more than a quarter amid investor fears over the airline’s resilience amid the coronavirus outbreak.
The selloff came as analysts warned that the airline’s cash reserves were slim. On Thursday, shares had already tumbled as the budget carrier withdrew its profits forecasts from last month and cancelled 22 transatlantic flights in the spring due to reduced passenger demand.
The company said it had already reduced capacity by 15% this year, and had relatively low exposure to Italy and the business travel market, both of which have been hard-hit by the coronavirus outbreak. However, its share price has now dropped by more than 70% in less than a month.The company said it had already reduced capacity by 15% this year, and had relatively low exposure to Italy and the business travel market, both of which have been hard-hit by the coronavirus outbreak. However, its share price has now dropped by more than 70% in less than a month.
Norwegian is the third largest low-cost carrier in Europe behind easyJet and Ryanair,and a pioneer of low-cost long-haul flights. Norwegian is the third-largest low-cost carrier in Europe behind easyJet and Ryanair,and a pioneer of low-cost, long-haul flights.
While several analysts have viewed Norwegian as undervalued after it appeared to have got on to a firmer financial footing, on Friday morning the Oslo-based Pareto Securities cut its rating on the stock from buy to hold. Analyst Kenneth Sivertsen said: “The situation it is likely to wipe out [Norwegian’s] stellar start of the year and a prolonged crisis might require equity refill as the cash buffer is slim.”While several analysts have viewed Norwegian as undervalued after it appeared to have got on to a firmer financial footing, on Friday morning the Oslo-based Pareto Securities cut its rating on the stock from buy to hold. Analyst Kenneth Sivertsen said: “The situation it is likely to wipe out [Norwegian’s] stellar start of the year and a prolonged crisis might require equity refill as the cash buffer is slim.”
Airlines worldwide have been hit hard by the coronavirus outbreak, with many implementing emergency cost-cutting measures and cutting back their flight schedules. The owners of Flybe said the coronavirus was the final blow that pushed Europe’s largest regional airline into administration this week.Airlines worldwide have been hit hard by the coronavirus outbreak, with many implementing emergency cost-cutting measures and cutting back their flight schedules. The owners of Flybe said the coronavirus was the final blow that pushed Europe’s largest regional airline into administration this week.
According to the International Air Transport Association (Iata), the impact of the coronavirus could prompt passenger airlines to lose up to $113bn (£87bn) in revenues this year.According to the International Air Transport Association (Iata), the impact of the coronavirus could prompt passenger airlines to lose up to $113bn (£87bn) in revenues this year.
While Norwegian’s share price has dropped more than most, airlines have on average had around 25% wiped off their market value since the start of the outbreak in China.While Norwegian’s share price has dropped more than most, airlines have on average had around 25% wiped off their market value since the start of the outbreak in China.