Airline stocks tumble as the coronavirus spreads outside of China

Key Points
  • Airline stocks tumbled more than the broader market as cases rose outside of China.
  • South Korea and Italy reported an increase in coronavirus cases and deaths.
  • U.S. carriers have already suspended service to mainland China and Hong Kong because of the virus.
How coronavirus fears are hurting airline stocks

Airline stocks fell Monday as fears about the spread of the coronavirus beyond China added to worries about travel demand and the broader economy, despite a drop in fuel prices.

American Airlines shares dropped 8.5% to $25.45, a more than four-month low. Delta Air Lines' stock lost 6.3% to end at $54.23, lowest price in nearly four months, while United Airlines ended off 3.3% and Southwest Airlines fell 4.3%. The S&P 500 ended the day 3.4% lower.

Close to 80,000 cases of the virus, now known as COVID-19, have been reported along with at least 2,621 deaths. Cases outside of China, where most of the infections are located, have increased, with Italy reporting more than 220 and South Korea confirming more than 830.

Ireland's Department of Foreign Affairs and Trade warned citizens not to travel to affected areas, helping drive down shares of European carriers. Budget airline easyJet lost nearly 16.7% while rival Ryanair fell 13.5%. Deutsche Lufthansa fell 8.8%, British Airways' parent, International Consolidated Airlines Group, fell more than 9% and Air France-KLM lost 8.7%.

More than 200,000 flights to, from and within China have already been canceled because of the virus, according to aviation consulting firm Cirium, and more disruptions are possible if the virus continues to spread.

The coronavirus is expected to eat into carriers' revenue this year. Air travel demand globally is set to fall for the first time since 2009 and cost airlines some $29 billion — mostly in the Asia-Pacific region — in revenue, the International Air Transport Association warned last week.

All U.S. carriers have already suspended service to mainland China and Hong Kong because of the outbreak of COVID-19. New cases in South Korea, Iran and Italy have added to concerns about the rapid spread of the virus, as airlines look ahead to the busy travel periods in the second and third quarters.

What does the coronavirus mean for China's economy?