Airline shares nosedive as plane fleets set to be grounded

Shares in Ryanair and its chief rivals, including Aer Lingus owner IAG, plummeted on a day of carnage for airline stocks as all of Europe’s main carriers put the brakes on the vast majority of their flights as the fallout from the spread of the coronavirus continued to escalate.

Ryanair said it expects to ground the majority of its fleet, across Europe, over the next week to 10 days.

For the months of April and May, Ryanair said it expects to reduce its seat capacity by up to 80%. It said a full grounding of its fleet cannot be ruled out.

“We have seen a substantial decline in bookings over the last two weeks, and we expect this will continue for the foreseeable future. We will continue to monitor demand, as well as Government flight restrictions, and we will continue to make further cuts to schedules as necessary,” Ryanair said.

Aer Lingus and British Airways owner IAG has already suspended flights to China, reduced capacity on Asian routes and cancelled all flights to and from Italy.

IAG is now set to cut its flying capacity by at least 75% over the next two months.

"We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer," said group CEO Willie Walsh, who has deferred his planned retirement to continue leading the group in the face of the coronavirus threat.

IAG shares tumbled 27%. Ryanair, down 19%, at one stage, closed down 12%, while its chief low fares rival EasyJet shed nearly 20% of its stock value.

EasyJet has also announced further flight cancellations and said it will continue to cancel flights on a rolling basis for the foreseeable future. This, it said, could result in the grounding of the majority of the airline’s fleet.

"European aviation faces a precarious future and it is clear that co-ordinated government backing will be required to ensure the industry survives and is able to continue to operate when the crisis is over,” said EasyJet boss Johan Lundgren.

Norwegian said it will cancel 85% of its total flights and temporarily lay-off around 7,300 employees.

Chief executive Jacob Schram said

What our industry is now facing is unprecedented and critical as we are approaching a scenario where most of our airplanes will be temporarily grounded.

German airline Lufthansa also fell, after it said it would further cut its flight schedule after announcing that its Austrian Airlines division was scrapping all flights in response to the coronavirus-induced collapse in passenger demand.

The airline group said it would cut long-haul capacity by up to 90% from today, and would only operate 20% of intra-Europe flights it had planned to operate.

Britain said it was engaging with aviation leaders over support for the industry. EasyJet and Virgin Atlantic have called for government aid, but IAG – which is opposed to government support for airlines – has not.