Airline cruise stocks pummeled on coronavirus fear

The stocks of American Airlines and several cruise lines
were among the worst performers in the Standard & Poor’s 500 index Monday,
as investors fret that the new coronavirus could take hold outside China and
further disrupt international travel.

Shares of Norwegian Cruise Line Holdings Ltd., Carnival
Corp. and Royal Caribbean Cruises Ltd. tumbled about 9%. American Airlines
Group Inc. shed 8.5%, and Delta Air Lines Inc. and online travel agency Expedia
Group Inc. fell more than 6%.

CFRA Research lowered its investment rating on United
Airlines Holdings Inc. to “hold” from “buy.” The firm says United is even more
dependent on international revenue than American or Delta. However, United’s
stock ended down a relatively modest 3.3%. 

United investors might have been partially mollified by
unrelated news that the airline extended a credit card agreement with Chase and
Visa through 2029, increasing the deal’s 2020 cash contribution to the airline
by an estimated $400 million. The extension was announced after the market
closed Friday.

Fears about the new virus’ effect on the global economy grew
after a spike in new cases reported in Italy, South Korea and Iran. Italy
imposed travel restrictions in some areas to prevent the virus from spreading.

There are signs that the impact on travel in China, where
the virus started, may be hitting a plateau or even easing. OAG, an
aviation-data firm, said Chinese airlines scheduled an increase of more than
25% in seats on domestic flights this week, the first gain in more than a

However, OAG cautioned that the capacity increases could be “smoke
and mirrors” — that Chinese airlines could cancel flights at
the last moment. “Monitoring the actual number of flights operated in China
this week will be interesting,” the firm said in a report.

China is the world’s second-biggest air-travel market. In
the last six weeks, Chinese airlines have canceled nearly the number of seats
that airlines offer between the United States and Western Europe during an
entire year, OAG said.

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