Airways shares, Boeing tumble amid uptick in Covid instances

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Passengers board an American Airlines flight at Ronald Reagan Washington National Airport in Arlington, Virginia on April 11, 2021.

Andrew Caballero-Reynolds | AFP | Getty Images

U.S. airline stocks slumped in early Monday trading as a surge in Covid-19 cases raised concerns about economic recovery and hit one of the sectors most closely linked to eased pandemic restrictions particularly hard.

American Airlines and United Airlines both fell more than 5% in morning trading on Monday. Delta Air Lines was down more than 4% and Southwest Airlines was down nearly 4%. The Hilton and Marriott hotel chains fell by just under 3% and 4% respectively.

Aircraft maker Boeing’s shares were down more than 5%, the largest percentage drop in the Dow Jones Industrial Average.

The demand for travel has risen sharply since spring. Delta and American both saw positive outlook thanks to a jump booking last week. The Transportation Security Administration screened nearly 2.23 million people at U.S. airports on Sunday, most since February 28, 2020, weeks before the World Health Organization declared Covid a pandemic.

But concerns about the fast-spreading Delta variant of Covid, now the dominant strain in the US, by and large weighed on the market on Monday. Travel stocks, which are sensitive to the number of cases and related restrictions, fell more sharply than other sectors.

The trend also raises questions about international travel. International and business travel have largely been absent from the recent rebound in airline bookings, although executives said earlier this month they have rebounded. The United States still bans most non-US citizens from entering the European Union, the United Kingdom, India, and other nations, despite the travel industry’s repeated pushes for the Biden administration to lift some of these rules.

Some pandemic rules are returning due to the increase in cases. The Los Angeles District reintroduced a mask mandate for indoor use last week, including for people who have been vaccinated, as the number of Covid-19 cases has increased there. The Southern Nevada Health District, which covers Las Vegas, also urges everyone to wear masks indoors as cases increase across the state.

According to a CNBC analysis of data from Johns Hopkins University, cases in the US rose about 66% over the past week to a seven-day average of about 32,300 new cases per day.

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