There’s been carnage this morning on stock markets, with shares in airlines and hotels plunging after President Trump last night announced that the United States is closing its borders to visitors from most European countries until next month.
Shares in Aer Lingus owner IAG collapsed almost 12pc in early trading, while Ryanair had sank 6.6pc.
Dalata, Ireland’s biggest hotel operator that also has operations in the UK, tumbled almost 9pc. Shares in French hotel operator Accor were 9pc lower. In the US, Intercontinental Hotel shares were 7pc lower ahead of the opening of markets there today.
The unprecedented move by the United States to seal its borders amid the coronavirus outbreak is another hammer blow to the world economy as it grapples to contain the pandemic.
The move is even more drastic than that seen immediately after the 9/11 terror attacks in 2001. US airspace reopened to civilian traffic just three days after those events.
Even the 2010 eruption of Iceland’s Eyjafjallajokull volcano, while vast swathes of European airspace were closed, it was largely open again within eight days bar one or two hiccups.
IAG also owns British Airways, Iberia, Vueling and Level. The group’s shares likely would have declined more sharply except for the fact that the UK and Ireland have not been hit by the US travel ban.
Shares in Lufthansa, which this week said it’s likely to slash its schedules by about 50pc, were 9pc lower in early trading. Norwegian Air – already trying to get into financial shape even before the crisis – saw its shares plummet 24pc.
The US move will place enormous financial pressure on both European and American carriers.
Before the market opens in New York today, shares in American Airlines are already showing that they’ll open 12pc lower, as are shares in United.
The shake-out in the industry as a result of the virus that was predicted by the likes of Ryanair chief executive Michael O’Leary now looks like it will be rout that will leave the airline industry bruised and battered for years to come.
Goodbody Stockbrokers chief economist Dermot O’Leary pointed out this morning that tourism accounts for 10pc of total employment in Ireland. He said that while Ireland and the UK are not yet part of the travel ban, “one has to think that they may soon be”.
That will have a devastating impact on the tourism sector.
Mr O’Leary pointed out that while the UK is the most important source of tourists into Ireland, with 4.7m visitors from there, the number from the US has been increasing in recent years. Those US tourists also spend much more.
In 2019, US and Canadian tourists to Ireland spent an average of €701 each here, excluding airfares. That compared to the €549 spent by German tourists and the €258 by those from the UK.
While Gus Kelly, the chief executive of the one of the world’s largest aircraft lessors, Dublin-based Aercap, said this week that he did not see the coronavirus negatively impacting the long-term global air passenger growth trajectory, it’s hard to see how Covid-19 will not have some sort of lasting legacy on the rapid rate of expansion that’s been seen in the past decade.
Shares in Aercap sank 11.6pc yesterday in New York.