Norwegian Air, which was already financially vulnerable, became the first casualty of Covid-19 as the transatlantic carrier announced a huge programme of short-term flight cancellations and layoffs in response to the ban imposed by US president Donald Trump on visitors to the US from the — the 26 countries in continental Europe which allow free movement without passport checks through their mutual borders.
The airline, which pulled out of transatlantic flights from Ireland last year, said it will ground around half of its long-haul aircraft and cancel a quarter if its short-haul routes through the end of May.
“The new restrictions imposed further pressure on an already difficult situation,” said its chief executive Jacob Schram, as he called on governments “to act now to ensure that the aviation industry can protect jobs and continue to be a vital part of the global economic recovery.”
The call came as the shares of long-haul airlines, including IAG, the owner of Aer Lingus and British Airways, slumped.
IAG lost 15% of its value in London trade, Air France-KLM slumped 13% in Paris, and Lufthansa dived 14% in Frankfurt trade.
Airline stocks took a major beating through the trading sessions, as European stock markets posted their worst day in history.
Non-US citizens who have visited a Schengen country in the two weeks prior to their scheduled arrival in the US, won’t be permitted to enter the US from midnight.
The industry has lost more than €90bn in market value so far this year.
Mr Trump’s controls will almost certainly mean more flights scrapped at European carriers and US peers.
Struggling companies like transatlantic discounter Norwegian Air may be pushed closer to the brink.
The government in Oslo said it is examining steps to help the industry.
“Things are moving so fast,” said Brendan Sobie of the Sobie Aviation consultancy.
“The crisis that the industry is facing right now is likely to be the worst in over 40 years,” he said.
Mr Trump’s speech offered limited substantial steps beyond the travel ban, and failed to reassure nervous investors.
The MSCI All-Country World Index extended losses to trade more than 20% below last month’s peak, signalling a bear market.
Restrictions on travel in Europe will hit some of the most popular long-haul routes. France, Germany and the Netherlands are home to three of the top 10 gateways to America, according to the US Department of Transportation.
The US is the world’s largest air travel market, though China is catching up fast.
“As the scenario continues to evolve, so does the assessed impact,” IATA, which represents about 290 airlines globally, said in a statement following the US announcement.