US Ebola case grounds airline stocks; Dow falls 237 points

The news of the first Ebola case in the US sent airline stocks plummeting Wednesday, dragging the Dow down 237 points. Even domestic airlines with no presence in Ebola-stricken regions saw their stocks fall drastically. 

|
Stephan Savoia/AP/File
A Jet Blue jet taxis near an American Airlines jet parked at its gate at Boston's Logan International Airport. The first US Ebola case confirmed by the CDC sent shares of major airlines sharply down Wednesday, Oct. 1, 2014.

The first Ebola case in the US was diagnosed by medical professionals in Dallas Tuesday, but experts say the disease still poses little threat domestically. The bigger threat may be to the travel industry.

Shares of major air carriers slipped between 2 and 4 percent Wednesday in the wake of the Centers for Disease Control and Prevention’s (CDC) announcement of the US case. Delta Airlines was down 3.46 percent on the day; United Airlines was down 2.84 percent, and American Airlines, which has a hub in Dallas (where the ebola case was diagnosed), fell 3.07 percent by about 2 p.m., and even chiefly domestic carriers like JetBlue and Southwest suffered losses.

The swoon extended to travel booking companies like Priceline and Expedia, which fell 1.81 percent and 3.24 percent, respectively.

Combined with global economic concerns stemming from the ebola crisis and other issues, like the protests in Hong Kong, the airline industry losses contributed to a gloomy day for the stock market. The Dow fell 237 points.

Overall, the airline industry has had an enviable few years financially. Major mergers and profit-boosting measures, including the restructuring of frequent-flyer programs for many major carriers, have sent shares soaring in 2014. Southwest Airlines shares jumped 85 percent in 2013 and were on pace for a 80 percent gain for the first nine months of this year. American Airlines shares were up 70 percent in the early part of the year before tapering off in recent weeks.

But the travel industry is particularly vulnerable to external forces, illness scares chief among them. Airline travel took a huge dive in 2003 at the height of the SARS scare, Robert Mann, an airline industry analyst and consultant, writes via e-mail. During that time, he says, “capacity [on flights to Asia] was down by as much as 30 percent for more than 8 weeks, only recovering totally after 6 months.”

Worries over bird flu last year and swine flu in 2009 also sent airline stocks tumbling.

“The worse the news headlines get about this, the more risk there is to airlines,” Stifel Financial Corp. analyst Joe Denardi told Bloomberg News.

Still, the fact that airlines with no presence in Africa are also falling has some speculating that today’s dips could be the result of something other than ebola fears. At Time.com, Morningstar analyst Neal Dihora raises the possibility of low oil prices, which he says could make investors think something is amiss with the global economy.

Airlines can allay passenger fears, Mr. Mann says, by “taking guidance from CDC and WHO officials on precautions and their roles,” and "leaving it up to gateway airport and government officials to screen arriving and departing passengers.”

On the other end of the market, the US ebola diagnosis sent shares of drug companies working on treatments for the disease surging Wednesday. 

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to US Ebola case grounds airline stocks; Dow falls 237 points
Read this article in
https://www.csmonitor.com/Business/2014/1001/US-Ebola-case-grounds-airline-stocks-Dow-falls-237-points
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe