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Major U.S. carriers with European routes, including American Airlines, Delta Air Lines and United Airlines, were pointing to losses of 9 percent to 13 percent in early trading. Not including Thursday’s drop, the S&P 500 Airlines Index has fallen 33 percent since Jan. 21, the day COVID-19 was first reported in the U.S.
"We made a lifesaving move with early action on China,” Trump said as he addressed the nation from the Oval Office on Wednesday evening. “Now we must take the same action with Europe.”
COVID-19 has infected 14,858 people and killed 702 in Italy, France, Spain and Germany, according to the latest update from the World Health Organization.
The full European ban, which doesn't apply to the U.K., follows the administration's Feb. 29 warning against travel to the Lombardy and Veneto regions of Italy, the first parts of the country closed off to curb the virus's spread. Rome locked down the entire country on Monday.
Trump's action was met with criticism by the European Union, which "disapproves of the fact that the U.S. decision to impose a travel ban was taken unilaterally and without consultation," European Commission President Ursula von der Leyen said in a joint statement with European Council President Charles Michel. "The coronavirus is a global crisis, not limited to any continent and it requires cooperation."
The virus has dramatically reduced demand for air travel and prompted social distancing, leading the International Air Transport Association to warn last week that the virus might wipe out $113 billion of revenue for the industry worldwide.
“Our sense is that there have already been so many transatlantic cancellations that it may not make much of a difference,” Deutsche Bank analyst Michael Linenberg wrote in a note to clients on Thursday.
Last week, analysts at Moody’s downgraded their outlook on global passenger airlines to negative and warned that if COVID-19 persists through June, operating profits would drop more than 20 percent for carriers.
“If the outbreak persists beyond the first half and/or the eventual recovery in the second half of the year is weaker than expected, the financial effect and credit risk for the airline sector would be greater,” the analysts wrote.