The fallout from the coronavirus spread across the Pacific on Friday, with Australian travel firms issuing profit warnings and Japanese carriers cutting capacity while U.S. airlines rushed to cut flights to Europe in the wake of new travel restrictions.
U.S. travel curbs on much of continental Europe announced by President Donald Trump on Wednesday evening deepened the sector’s misery that began after the virus emerged in China late last year and reduced traffic.
United Airlines Holdings Inc. warned of U.S. travel disruption as the virus spreads domestically and major tourist attractions like Walt Disney Co’s theme parks in California and Florida said they would close.
American Airlines Group Inc. and United said they would continue normal flights to and from Europe for the next week but would be reducing capacity to Europe by around 50% in April.
American also said it was cutting international capacity by 34% for the summer travel season and accelerating the retirement of its Boeing Co 757 and 767 planes.
Delta Air Lines Inc also said it would significantly reduce its U.S.-Europe schedule after Sunday as it continues to watch customer demand.
Several Latin American countries stepped up measures to slow the spread of the coronavirus, halting flights to and from Europe. Indian airline share prices fell more than 10% for a second day on Friday, with the government having restricted visit visas.
The International Air Transport Association (IATA), a global industry group representing airlines, called on governments to consider extending lines of credit, reducing infrastructure costs and cutting taxes.
“There is a heightened concern there will be increased airline bankruptcies in 2020 given the fallout from the coronavirus,” Cowen analyst Helane Becker said.
“We expect some governments to step in to help some airlines, but ultimately we expect more airlines to fail this year than last year,” she said in a note to clients, citing Cirium data that 41 airlines with 324 aircraft went bankrupt last year.
Cash-strapped low-cost carrier Norwegian Air Shuttle ASA said on Thursday it would cut 4,000 flights and temporarily lay off up to half of its employees due to the coronavirus outbreak.
Virgin Australia Holdings Ltd , Auckland International Airport Ltd, Flight Centre Travel Group Ltd and Corporate Travel Management Ltd said they would take hits to earnings from reduced travel demand, which included an 18% decline in international passengers at Auckland’s airport in the first 10 days of March.
Australia’s No. 2 carrier, Virgin Australia, said it would offer discounted fares and cut some flights from Sydney to Los Angeles as demand for trans-Pacific travel fell.
“You will see us continue to be very disciplined with capacity as the situation evolves,” Virgin Australia Chief Executive Paul Scurrah told reporters, echoing similar comments by rival Qantas Airways Ltd earlier in the week.
Virgin shares fell to a record low in early trade but later rebounded to close 32% higher amid a late rally in the broader Australian market that reversed an 8% loss to close up 4.4%. Qantas shares closed 12.6% lower, having fallen as much as 16% in trading.
Virgin and Flight Centre joined a growing list of travel companies, which includes the big U.S. airlines, that are freezing hiring, halting executive bonuses and offering unpaid leave to staff in an effort to preserve cash.
Airline stocks in Asia were also recovering in later trade from earlier lows, with Singapore Airlines Ltd shares steady at 0550 GMT.
Earlier in the day, Singapore Changi Airport announced seat capacity for the month of March was down nearly 30% from what was originally scheduled.
Singapore will deny from Monday entry or transit to visitors who have been in Italy, France, Spain or Germany in the last 14 days as part of measures to control the fast-spreading coronavirus, the health ministry said on Friday.
CGS-CIMB analyst Raymond Yap said the global spread of the virus meant the fall in demand for Singapore Airlines regional flights was likely to spread to long-haul flights, hurting the take-up rate in the lucrative business and first-class cabins.
Japan’s ANA Holdings Inc and Japan Airlines Co Ltd (JAL) were down more than 7% in afternoon trade, having also fallen on Thursday.
JAL said it would cut 1,468 domestic flights between March 20 and March 28 stemming from lower demand because various sporting and cultural events had been suspended in Japan.
ANA will cut the number of daily flights from Japan to Los Angeles and New York and reduce operations to other cities in North America from Monday, it said in a press release on its website. It also said there will also be fewer flights to European destinations including France, Germany and Belgium.