25th Mar 2021 19:10
(Alliance News) - Airlines will suffer as the Covid-19 pandemic fuels global business travel uncertainty, with recovery unlikely before 2024 as virtual meetings may replace travel, Moody's Investors Service said on Wednesday.
The ratings agency said full-service carriers such as Delta Airlines, United Airlines Holdings Inc, American Airlines Group Inc, Deutsche Lufthansa AG, and British Airways will be most affected by the slow pick up in business travel.
"Global business travel is unlikely to make a full recovery before 2024, especially with the use of virtual meetings as an ongoing substitute. Around 20%-25% of business travel involves meeting people from within a company's own organization - these trips are most at risk of being replaced," said Martin Hallmark, senior vice president at Moody's Investors Service.
"To offset the possible negative impact, we expect airlines to manage their capacity and to benefit from efficiency savings and cost cuts," added Hallmark.
Moody's noted that sectors with a lot of site-specific activities such as manufacturing, real estate and construction are also likely to recover sooner and see faster growth in business travel after the pandemic, especially in countries such as China, Japan and Germany.
United Airlines shares were trading 3.% higher in New York on Thursday at USD55.50 each, while American Airlines stock was up 3.2% at USD22.51 a share. In Europe, Lufthansa shares closed down 0.5% in Frankfurt at EUR10.97 each, while International Consolidated Airline Group SA stock ended down 0.6% at 193.55 pence a share in London.
By Evelina Grecenko; [email protected]
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