Global airlines continued to tumble as investors worried that demand for flights through the U.K. could suffer following the country’s decision to leave the European Union.
EasyJet Plc fell the most in 12 years after warning that the U.K. vote will hurt earnings for the rest of the summer as travel demand wanes. In the U.S., United Continental Holdings Inc. posted its biggest two-day intraday decline in five years, while American Airlines Group Inc. and Delta Air Lines Inc. dropped the most since August.
U.S. airlines could take a hit if, as expected, Britons cut their trans-Atlantic travel because of a plummeting pound, although that could be partly offset if Americans cross the pond to take advantage of the dollar’s relative strength. Concern about the future of the U.S.’s market-access treaty with Europe also weighed on shares.
“The vote to leave the EU does create uncertainty with respect to near-term demand for air travel to/from the U.K., as well as how the U.K. will feature in a revised EU-U.S. Open Skies accord,” Deutsche Bank analyst Michael Linenberg said in a note on Monday. The three major US airlines devote 2.8 percent to 6.3 percent of their seating capacity to the U.K. market, so weak traffic such flights could hurt earnings, he said.
Shares of U.K.-based airlines took the biggest drubbing.
Luton, England-based EasyJet plunged 22 percent to close at 1,020 pence. Europe’s second-biggest discount carrier dropped 14 percent on Friday after the Brexit results were announced. International Consolidated Airlines Group SA declined 16 percent Monday after tumbling 23 percent Friday. The company’s British Airways unit is particularly exposed to any impact that leaving the EU will have on London’s standing as a financial center.