The sudden closure of London’s Heathrow Airport due to a major power outage following a fire at a west London electrical substation has sent airline and travel sector stocks sharply lower.
IAG, the owner of British Airways and Iberia, dropped more than 3%, while KLM-Air France slipped 1.5%.
Ryanair, despite not operating from Heathrow, also joined the broader airline selloff.
The negative impact extended beyond airlines, with major hotel groups also experiencing declines.
EasyJet fell close to 3% before tracing its way back to the green, while InterContinental Hotels saw a 3% drop, shedding 264p to trade at 8310p.
Premier Inn owner Whitbread also dipped by more than 3% at one point as the uncertainty surrounding travel demand weighed on investor sentiment.
Kathleen Brooks, research director at XTB, noted that the Heathrow disruption has provided investors with yet another reason to sell airline stocks, which have been under pressure due to concerns over a US recession and weakening consumer confidence.
The disruption caused by the Heathrow closure for the entire day on Friday is huge, but it will be temporary, and we expect airline stocks to stabilise after an initial knee jerk sell off
She added that the airline sector is fragile now, due to concerns about a US recession and a weak global consumer.
“IAG’s share price is down 16% in the past month, so news of disruption at Europe’s busiest airport is the latest event to knock this sector,” she said.
In the US, major carriers such as Delta and American Airlines were mostly flat in pre-market trading, suggesting the immediate fallout was largely confined to European markets.
At least 120 inbound flights diverted due to Heathrow’s shutdown
The chaos at Heathrow unfolded after a fire at a west London electrical substation triggered a major power outage, forcing the airport to suspend all operations until at least midnight.
Passengers were warned not to travel to the airport under any circumstances, while British Airways announced it would not be operating flights “until further notice.”
With over 1,330 flights scheduled to depart from Heathrow today, affecting up to 291,000 passengers, the disruption has left thousands stranded.
According to flight tracking service FlightRadar24, at least 120 inbound flights have been diverted to other airports.
This marks the first time Heathrow has faced a complete shutdown since 2010.
“Significant disruption is expected over the coming days,” a Heathrow spokesperson said.
Airlines scramble to respond to crisis
Major airlines operating out of Heathrow have issued statements outlining their responses:
British Airways: The airline advised passengers not to travel to the airport and warned of a “significant impact” on its operations.
United Airlines: The carrier confirmed that seven flights were forced to return to their origin or divert elsewhere, with all Friday flights to Heathrow now cancelled.
Air India: Flights from Mumbai and Delhi were rerouted or cancelled, with all London-bound services suspended for March 21.
EasyJet: Although it does not operate from Heathrow, the airline announced it would deploy larger aircraft on key routes to Milan, Amsterdam, Edinburgh, Paris, Munich, and Madrid to accommodate displaced passengers.
As authorities work to restore power and normal operations, market observers will be watching closely to see whether airline stocks can recover from the sharp declines triggered by Heathrow’s unexpected shutdown.
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