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The Covid-19 (Novel Coronavirus) has been spreading rapidly, as reports have suggested that the number of people affected with the disease has crossed 75000, while there have been around 2100 deaths caused by the virus. Though, the exact number of deaths is still not clear, as the official figures from Chinese government are in divergence to the reports by various independent agencies.
It has already been established that this outbreak is causing an enormous economic impact, to not just China, but in fact, to all parts of the world. As per a research by the economists from Oxford University, it has been suggested that the economic loss due to the spread of the coronavirus could reach up to US $1.1 trillion, making it one of the most damaging epidemic outbreak on both social as well as the economic front since SARS in 2003.
Furthermore, any impact to the Chinese economy is going to be a huge deterrent to the world economy as a whole, because of the role China plays in terms of trade and commerce, as well as the resources it provides and utilises, making it one of the biggest economies in the world.
This has also led the World Economic Forum (WEF) to study and research on the potential financial and monetary loss this epidemic could cause and to understand how it would hamper the global economic growth. The WEF has already estimated that this outbreak has led to the beginning of a slowdown in the growth of the world economy, with global logistics and supply chain space getting severely impacted, and the auto industry facing some serious challenges as far as supply is concerned. The outbreak is invariably also having an impact on the travel and tourism space. The Airline and shipping companies are expected to report a decline in revenues and profits, during the first quarter of 2020 on the back of cancellation of flights and weaker demand towards travelling to and from the entire Asian continent.
Challenges being faced by the airline and maritime companies
The airline companies like Air France-KLM as well as Qantas Airways have become the latest organisations to raise a flag, regarding the impact of the Covid-19 virus on their revenues and profits. This has been primarily because of the fact that these companies have had to cancel, suspend or postpone flights, causing these airline companies to incur huge unplanned costs. Another factor has been that people are avoiding or have stopped travelling to and from China, due to the travel advisories issued by the governments, especially for the Asian countries. Executives from the Air France â KLM group have suggested that if these services stayed suspended till the month of April 2020 (which could prolong further, as per the current statistics have suggested), the Covid-19 would wipe off expected profits between â¬150 million to â¬200 million.
Apart from the airlines, another transport medium for both personal and goods transport has been maritime services and shipping companies, which too have started the calculation of the financial impact incurred during the period, as well as the cost of the productivity that would be lost during the outbreak. The Danish logistics and supply chain conglomerate Maersk, that has a huge and dynamic shipping business, and takes care of at least one out of five containers that are shipped in the world has estimated that they have witnessed an extremely weak start to the year, by the time of the declaration of the first quarter results comes. The overall impact in terms of the exact cost has currently not yet been quantified by the company due to the large size of its business, but there are many voices from within the company suggesting that Coronavirus has weakened the demand, which has led the company to reduce the number of containers being shipped by sea during the period.
Some of the airline stocks trading on the London Stock Exchange market have also reported some financial damage due to the Coronavirus outbreak. The following is a brief look at the stock price performance for these companies.
EZJ Stock Price Performance
(Source: Thomson Reuters) Daily Chart as on 21-February-20, before the closing of the LSE Market
As on 21st February 2020, at 08:30 A.M (Greenwich Mean Time), by the time of writing this report, the EasyJet Plc Stock was trading at a price of GBX 1510.50 per stock on the London Stock Exchange market, a decline in the value of 0.43 per cent or GBX 6.50 per stock, as opposed to the price of the stock on the previous trading day, which had been reported to be at GBX 1517.00 per stock. At the time of writing this report, the market capitalisation of EasyJet Plc has been reported to be at a value of GBP 5.979 billion, with respect to the current trading price of the companyâs share.
It has been reported that the EasyJet Plc stock had gained around 16.19 per cent in value, in the last twelve months, since February 21, 2019, when the stock was trading at a price of GBX 1300.00 per stock at the time of the close of the market. It has also been reported that the companyâs stock has gained approximately 63.58 per cent, in the last six months, in comparison with the stock price of GBX 923.40 at the time of the close of the market as on August 21, 2019. EasyJet Plcâs stock has been reported to have lost 0.43 per cent, in the passing thirty daysâ time from the stock price of GBX 1517.00 per stock that the stock set as on January 21, 2020.
The beta of the stock of the company was reported at a value of 0.66 at the time of writing. This indicates the fact that the movement in the price of the stock, is less volatile, as opposed to the movement in the value of the comparative benchmark index.
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IAG Stock Price Performance
(Source: Thomson Reuters) Daily Chart as on 21-February-20, before the closing of the LSE Market
As on 21st February 2020, at 08:35 A.M (Greenwich Mean Time), by the time of writing this report, the International Consolidated Airlines Group SA Stock was trading at a price of GBX 625.80 per stock on the London Stock Exchange market, a decline in the value of 0.95 per cent or GBX 6.00 per stock, as opposed to the price of the stock on the previous trading day, which had been reported to be at GBX 631.80 per stock. At the time of writing this report, the market capitalisation of International Consolidated Airlines Group SA has been reported to be at a value of GBP 12.744 billion, with respect to the current trading price of the companyâs share.
It has been reported that the International Consolidated Airlines Group SA stock had lost around 2.89 per cent in value, in the last twelve months, since February 21, 2019, when the stock was trading at a price of GBX 644.40 per stock at the time of the close of the market. It has also been reported that the companyâs stock has gained approximately 48.89 per cent, in the last six months, in comparison with the stock price of GBX 420.30 at the time of the close of the market as on August 21, 2019. International Consolidated Airlines Group SAâs stock has been reported to have lost 1.88 per cent, in the passing thirty daysâ time from the stock price of GBX 637.80.00 per stock that the stock set as on January 21, 2020.
The beta of the stock of the company was reported at a value of 0.77 at the time of writing. This indicates the fact that the movement in the price of the stock, is less volatile, as opposed to the movement in the value of the comparative benchmark index.
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RYA Stock Price Performance
(Source: Thomson Reuters) Daily Chart as on 21-February-20, before the closing of the LSE Market
As on 21st February 2020, at 08:40 A.M (Greenwich Mean Time), by the time of writing this report, the Ryanair Holdings Plc Stock was trading at a price of EUR 15.24 per stock on the London Stock Exchange market, a decline in the value of 0.39 per cent or EUR 0.06 per stock, as opposed to the price of the stock on the previous trading day, which had been reported to be at EUR 15.30 per stock. At the time of writing this report, the market capitalisation of Ryanair Holdings Plc has been reported to be at a value of GBP 14.131 billion, with respect to the current trading price of the companyâs share.
It has been reported that the Ryanair Holdings Plc stock had gained around 26.68 per cent in value, in the last twelve months, since February 21, 2019, when the stock was trading at a price of EUR 12.03 per stock at the time of the close of the market. It has also been reported that the companyâs stock has gained approximately 79.34 per cent, in the last six months, in comparison with the stock price of EUR 8.498 at the time of the close of the market as on August 21, 2019. Ryanair Holdings Plcâs stock has been reported to have lost 1.61 per cent, in the passing thirty daysâ time from the stock price of EUR 15.49 per stock that the stock set as on January 21, 2020.
The beta of the stock of the company was reported at a value of 1. 22 at the time of writing. This indicates the fact that the movement in the price of the stock, is more volatile, as opposed to the movement in the value of the comparative benchmark index.
