Rolls-Royce and airlines fall as Iran war threatens jet fuel supplies Proactive uses images sourced from Shutterstock
Shares in airlines and associated industries were hit on Monday as investors buckle up for a longer period of turbulence in air travel markets due to the Iran war, hiking fuel prices and dampening demand
On the FTSE 100 British Airways owner International Consolidated Airlines Group SA (LSE:IAG) and easyJet PLC (LSE:EZJ) were down 2.9% and 2.8%, while Rolls-Royce Holdings PLC (LSE:RR.), which makes and maintains engines, fell 4.9%. Wizz Air Holdings PLC (AIM:WIZZ) was down 3.7% on the FTSE 250, with AIM-listed Jet2 PLC (AIM:JET2) falling 2%.
“While the Iran war continues to escalate, last week we saw first signs of potential spill-over effect on the commercial aerospace sector, especially in Europe,” said analysts at Deutsche Bank.
Qatar, Kuwait and Bahrain air space are “practically closed”, they noted, while flights from UAE are theoretically operational but remain patchy, with reports of several cancelled and returned flights from the EU and Asia.
“The first impact on European airlines was higher fuel prices and higher fuel consumption on re-routed flights.
“Now the concern has spilled over to the larger question of jet fuel availability. Europe is among the most exposed, with 25–30% of its jet fuel demand coming from the Gulf region.
“This now leaves Europe largely reliant on commercial inventories that typically amount to just over one month of demand.”