European aviation stocks declined, following a drop among Asian carriers, on concern an outbreak of the bird-flu virus in China will clip travel and hurt demand already unsettled by rising military tensions with North Korea.
Air France-KLM, Europe’s biggest airline, fell as much as 4.9 percent in Paris trading, while Deutsche Lufthansa AG declined as much as 5.8 percent in Frankfurt and British Airways parent IAG lost 5.2 percent in London. The drop spilled over to European low-cost carriers that don’t serve global routes, with Ryanair Holdings Plc falling 3.4 percent in Dublin and Easyjet Plc retreating 5.1 percent, the most in a year.
“The airline weakness is down to bird flu and more general concerns over issues such North Korea,” James Hollins, a London-based analyst at Investec said today. “There is a fear these potential crises could curtail travel.”
European airlines followed a retreat among Chinese stocks after at least six people died from the new strain of bird flu that emerged in eastern China. Previous bird flu outbreaks and the occurrence of severe acute respiratory syndrome, or SARS, had emptied planes and caused industry-wide losses.
China Southern Airlines Co. plunged the most since September 2001 in Hong Kong trading, leading a slump in shares of the nation’s carriers.
China Southern, the country’s biggest domestic carrier, slumped as much as 15 percent, while Cathay Pacific Airways Ltd. dropped the most in almost 11 months. Shares in Air China Ltd., China Eastern Airlines Corp., Singapore Airlines Ltd. and Qantas Airways Ltd. also declined, causing the Bloomberg Asia Pacific Airlines Index to drop the most since May.
“There have been more casualties associated with bird flu, and that’s led to speculation that we’re going to have another large outbreak,” said Penny Butcher, an analyst at Morgan Stanley in London.
The world’s airlines suffered a $10 billion loss a decade ago on the SARS outbreak that killed 774 people in 2002 and 2003. At the peak of the outbreak, carriers including including Singapore Airlines and Hong Kong’s Cathay Pacific, cut more than 1,150 weekly flights.