The closure of Heathrow Airport on Friday is of course set to have an immediate impact on travellers – but the wider-reaching consequences will also ripple out across the course of the day, with one now being seen in the stock market.
While the airport itself is privately owned, many airlines are public listed companies, owned by shareholders by in the private finance sphere and by members of the public – also known as retail investors – who can hold shares in a range of ways including in share dealing accounts, through funds or even without knowing it in their pensions.
And the knock-on effect of a day-long shutdown certainly isn’t lost on the owner of British Airways, International Consolidated Airlines Group (IAG), which has seen a rapid and deep cut to its share price in the wake of the incident which sees 667 BA flights affected.
By 8:30am GMT, the IAG share price had declined four per cent – equivalent to losing more than half a billion pounds in market capitalisation.
With early trading particularly erratic as the news was digested, IAG did claw back some ground to sit around 2.8 per cent down for the day an hour after market opening, which still equates to a drop of close to £400,000,000 in market cap.
IAG has dropped around 14 per cent across the last month as airlines didn’t escape the wider uncertainty around Donald Trump’s policies and tariffs, with travel and fuel costs particular concerns, while other airlines giving profit warnings and being downgraded by analysts have hit the sector as a whole too across that time.
Even so, IAG has been one of the top five strongest FTSE 100 performers across the course of the last year, the share price up more than two-thirds in that time.
It’s important to note that early morning trading across the London markets were mostly flat or declining, so the entirety of the IAG fall is perhaps not attributable to the news at Heathrow, but it still marks a dramatic drop in value – particularly as it was the second-biggest faller on the day in early trading before clawing back some of that ground.
IAG wasn’t the only London Stock Exchange-listed airline to take a hit on the day either, with EasyJet dropping more than two per cent initially before recovering slightly to sit around 1.6 per cent down after 9am GMT.
Companies offering holiday insurance may also be affected to an extent, but with some flights being diverted rather than cancelled this may not be as dramatic an impact.
