Airlines nose-dive in coronavirus chaos
Does anyone else feel like weeks take decades to pass by right now? Well, the top bods at Lufthansa, EasyJet and Qantas sure do. As you may have heard, the world is currently grappling with a pandemic that has pitched its tent firmly in Europe. The outbreak is having an impact on almost every sector of society, but few industries have been as blindsided as the airline industry. What’s going on and how are stocks faring? Let’s take a closer look.
Losing altitude
EasyJet and Lufthansa chiefs have said that some airlines may not survive without government support if the coronavirus pandemic drags on.
This announcement came just after Qantas became the latest of the big-boys to cancel their international routes, and with the Indian government reportedly preparing a parachute package (pardon the pun) of around $1.6bn to support its carriers.
So, what’s up with the airline industry? The travel industry has taken a big whack, not to mention the fact that companies all over the world are instructing their workforces to work from home, cancelling all unnecessary travel.
Time for governments to hop on board?
Lufthansa has already entered into talks with the German government about providing special loans, with their Chief Executive Carsten Spohr stating,
“The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid,” said Lufthansa chief executive Carsten Spohr.
Such calls were repeated by Spohr’s opposite number at EasyJet, Johan Lundgren, who also warned that airlines could go bankrupt without state aid.
Last Thursday, Qantas became the latest major airline to cancel international flights and said it would send home two-thirds of its 30,000-strong workforce.
How’s the stock price looking?
Unsurprisingly, none of these companies’ stocks are taking off!
Lufthansa (LHA)
Lufthansa stock, previous month
Source: Google
On the 21st February, LHA share price sat at 14.82 EUR. It closed on Friday at 9.16 EUR — a drop of 38.19% over the month.
EasyJet (EZJ)
EasyJet stock, previous month
Source: Google
Back at the tail-end of February, EasyJet share price was 15.08 GBP. It closed on Friday at exactly 6.00 GBP — shedding 60.21% in the last 4 weeks!
Qantas (QAN)
Qantas stock, previous month
Source: Google
Qantas has had a similar trajectory. On Monday 24th February, trading opened with QAN at 6.02 AUD a pop. Since then, it has dropped to just 2.36 AUD, a gigantic 60.8% down.
If you’re into your stocks, you’re going to want to keep an eye on those government stimulus packages, they may encourage investors to take a punt.
Key events this week
The pandemic has, of course, impacted the regular trading calendar, but here’s everything that should be coming up this week.
● We kick off the week with PMI Tuesday, with the German Manufacturing PMI (EUR), EU Markit PMI (EUR), and UK Markit Services PMI (GBP).
● The Royal Bank of New Zealand will be making some early announcements re. Interest Rates (NZD) on Tuesday. This will be followed by the UK’s Consumer Price Index (YoY) for February, and the US’ Nondefence Capital Goods Orders ex Aircraft release (Feb) (USD).
● The major events of the week will dry up on Thursday, but it’s a bumper one! The Bank of England will be making a raft of announcements re. Monetary Policy, and Interest Rates (GBP); followed later by the US’ Actualised GDP for Q4 and Initial Jobless Claims (USD). Lastly, Japan will have its Tokyo CPI ex Fresh Food (YoY) for March (JPY) aired by the Statistics Bureau.
As well as these, watch for potential price movements with everything that’s going on out there.
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Speak soon,
The Contentworks team
