Political tension between the U.S. and Russia mounts, and this time, Russia's state-run carrier Aeroflot may feel the pinch.
Aeroflot PJSC, Russia’s largest air carrier, plunged to an almost two-year low on Thursday after the U.S. threatened sanctions that could include flight restrictions.
The State Department announced new sanctions against Russia on Wednesday to punish President Vladimir Putin’s government for allegedly using a chemical weapon against former double agent Sergei Skripal in the U.K. earlier this year. A second round of sanctions in three months could include suspending Aeroflot’s flights to the U.S, according to the 1991 law under which they were imposed.
“If the U.S. goes ahead and bans Aeroflot flights to the country, the Russian state-run carrier may lose as much as 5 percent of its revenue,” said Denis Vorchik, an analyst at Uralsib Capital. “U.S. airlines may also suffer, as the Kremlin is likely to come up with a tit-for-tat response and restrict their flights in Russian skies.”
Aeroflot spokesman Maxim Fetisov declined to comment when contacted by Bloomberg.
Aeroflot fell the most in the MOEX Russia Index, dropping as much as 12 percent in Moscow before recovering to trade down 4.4% as of 12:08 p.m. Russian billionaire Oleg Deripaska saw his companies En+ Group Plc and United Co. Rusal Plc lose half their value after being targeted by a previous wave of U.S. sanctions in April.
New U.S. sanctions also put at risk the planned purchase of 30 Boeing 737 Max 8 plane by Aeroflot’s low-cost unit, Pobeda, according to Sova Capital.
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Photo credit: Aeroflot PJSC, Russia’s largest air carrier, plunged to an almost two-year low on Thursday after the U.S. threatened sanctions that could include flight restrictions. Bloomberg