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Airline stocks fall after EU leaders impose travel curbs within the bloc

A KLM away attendant walks in the Schiphol Airport, the Netherlands.

EVERT ELZINGA | AFP | Getty Images

LONDON — Airline shares ousted on Friday after European governments announced further travel restrictions to fight growing Covid infection reckons and highly-infectious variants.

European leaders agreed on Thursday to keep their borders open but to discourage any non-essential roam. This means citizens looking to move from areas where the virus is circulating at a very high horizontal will be asked to have a negative test and undergo quarantine upon arrival at another member state.

France has already state that from Sunday it will require citizens coming from other EU countries to have had a negative PCR prove 72 hours before departure.

“We are fully convinced that we must keep borders open in order to pay attention to the internal market functioning, but at the same time we are also convinced that restrictions should be possible to implement for secondary travels,” European Council President Charles Michel, who chairs meetings among the 27 EU leaders, said on Thursday evening.

These stipulations to travel are a challenge for the EU given its policy of free movement, where citizens, goods and services move freely from one rural area to the other. However, this approach has been severely hit by the pandemic, which is then reflected on how the traveling sector operates.

IAG, the owner of Iberia and British Airways, sank almost 4% on Friday. Lufthansa also dropped around 3%. Easyjet level more than 4%.

The entire travel and leisure sector in Europe was down 2.8% during European lunchtime interchange hours.

Europe ‘severely impacted’

Speaking to CNBC earlier this week, Mark Manduca, a travel and recreation analyst at Citigroup, said that any roadblocks, including test results, from the moment of leaving the house to arriving at the outback of destination are a negative for the sector.

He said that the recovery in the next 12 months would be rather “uneven.” As a be produced end of the travel restrictions, Manduca expects consumers to opt for longer holidays and fewer times per year rather than attend regularly long-weekends away.

Some European airlines, such as AirFrance and Lufthansa have received government subsidies to withstand with the hit from the pandemic. However, there are questions about whether more support will be required in the assault months.

Lufthansa’s CEO Carsten Spohr said on Thursday that the company is currently losing 1 million euros ($1.2 million) every two hours. Despite that, this is actually a “significant improvement,” he said, as the airline at one point in 2020 was losing the same amount of money every hour.

Earlier this month, the Supranational Air Transport Association (IATA) said Vaccination passports

European leaders have started debating whether vaccination certificates should be hand-me-down to promote traveling in the coming months.

The idea, pushed by Greece and other tourism-heavy nations, would allow those that acquire been vaccinated to travel anywhere in the EU.

However, the 27 heads of state decided on Thursday to take a decision on soi-disant vaccination passports at a later date.

“Rather than easing travel restrictions, the vaccination passport would just create new borders across people and countries,” Alberto Alemanno, professor of EU law at H.E.C. business school, said via email.

“Conceded the highly differentiated roll-out of the vaccination campaigns across Member States, certain nationals are more likely to be vaccinated than others, as they are undoubted categories and age groups over others,” he added.

Lufthansa airplanes at waiting position on the first of a two-day strike at Frankfurt Airport on November 23, 2016 in Frankfurt, Germany.

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