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Shares of US airline companies crashed on Monday as a spike in COVID-19 cases raised alarm bells about the economic recovery, hitting hard one of the sectors, which thrives only when the pandemic restrictions are eased.
Shares of United Airlines Holdings Inc (NASDAQ:UAL) tanked 5.54% while American Airlines Group Inc (NASDAQ:AAL) dropped 4.1%. Other than these two, Delta Air Lines, Inc. (NYSE:DAL) crashed 3.74%, while the losses at Southwest Airlines Co (NYSE:LUV) ended the day 2.83% down.
Shares of aircraft manufacturer Boeing Co (NYSE:BA) also dropped 4.93% to its lowest level in almost five months. The company was the biggest loser on the Dow Jones Industrial Average, or Dow30, overnight.
Demand for travel had picked up in the month of April, with the pandemic’s second wave subsiding in the US. Buoyed by the boost in travel demand, many of the airlines had even started issuing upbeat outlooks as well.
On the macro level, the economic recovery seemed to be back on track – and in a faster-than-expected way.
However, all this seems to be falling flat as Delta and Lambda variants have started spreading their deadly tentacles across the globe. The fast-spreading Delta variant is now the dominant strain in the US. During the last week, the US reported 229,553 fresh COVID-19 infections, a massive uptick of 54%. There have been advisories issued against global travel as well – including some from the US Center of Disease Control (USCDC). With travel restrictions and advisories in place, the travel sector seems to be the worst-hit space
Globally as well, after a decline in the month of June, the pandemic has started to pick up again, showing a double-digit growth in fresh cases.
Overnight, the Dow30 crashed 2.09% - the steepest decline since October 2020. On the other hand, the S&P 500 corrected by 1.59%, while the tech-heavy Nasdaq Composite shed 1.06%.
