Bird flu worries hurt airlines

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% in Paris trading, Deutsche Lufthansa declined as much as 5.8% in Frankfurt, and British Airways parent IAG lost 5.2% in London.

The drop spilled over to European low-cost carriers that don’t serve global routes, with Ryanair falling 3.5% and Easyjet down 5.1%, 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.

“There is a fear these potential crises could curtail travel.”

At least six people have died from a new strain of bird flu that has 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 plunged the most since Sept 2001 in Hong Kong trading.

China Southern, the country’s biggest domestic carrier, slumped as much as 15%, while Cathay Pacific Airways dropped the most in almost 11 months. Shares in Air China, China Eastern Airlines, Singapore Airlines, and Qantas Airways also fell, 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.

— Bloomberg

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