Airline and Travel Stocks Plunge on New Covid Variant Concerns

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Airlines and travel stocks plunged on Friday as concerns over a new quick-spreading Covid variant detected in South Africa that may be immune to current vaccines raised concerns that the travel sector’s recovery could be cut short.

Global markets sold off at the start of what is set to be a thin trading day following Thanksgiving in the U.S. amid fears that a new Covid variant named B.1.1.529 detected in South Africa that has already been detected in Israel and other countries is more transmissible that the Delta variant.

American Airlines  (AAL) – Get American Airlines Group, Inc. Report shares were down 7.25% in premarket trading, while Delta Air Lines  (DAL) – Get Delta Air Lines, Inc. Report was down 7.53%, Southwest Airlines  (LUV) – Get Southwest Airlines Co. Report was down 6.77%, and United Airlines  (UAL) – Get United Airlines Holdings, Inc. Report was down 8.2%. 

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Shares of other companies focused on travel and tourism were also down significantly, including Booking Holdings  (BKNG) – Get Booking Holdings Inc. Report, Expedia  (EXPE) – Get Expedia Group, Inc. Report, Carnival  (CCL) – Get Carnival Corporation Report, Marriott  (MAR) – Get Marriott International, Inc. (MAR) Report, AirBnB  (ABNB) – Get Airbnb Report and others. 

Of particular concern for investors focused on the travel industry was the Israeli’s government’s seemingly rapid-fire move to close off all air travel to and from South Africa, despite its global standing as one of the few countries ahead of the game in both vaccinations and boosters.

As of Friday morning, Singapore, Japan, India, Israel, Germany and the U.K. had imposed new restrictions on travelers from South Africa, while Australia said it’s closely monitoring the situation and European Commission President Ursula von der Leyen said the commission would propose closing the EU to air travel from southern Africa.

The World Health Organization (WHO) will hold a special meeting on Friday to discuss the new strain and its potential to alter vaccines, treatment plans, and diagnostics. 

Dr. Maria Van Kerhove, the WHO’s COVID-19 technical lead and an infectious disease epidemiologist, said monitoring is underway to better understand B.1.1.529’s mutations but indicated that it will take weeks to determine the variant’s vaccine resistance and transmissibility.

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