Airline Stocks Fall Following European Airspace Restrictions

The closure of EU airspace to Russian airliners and the prospect of Russia shutting out airlines in response knocked airline shares on Monday including Finnair, which cut its guidance and saw its shares tumble 21%.

Shares in European airlines and airport operators were down 3-6% in early trade.

Without access to Russia’s airspace, carriers will have to divert flights south while also avoiding areas of tension in the Middle East.

For Finland’s national carrier that could mean a loss of business as it uses a route across Russian skies from Europe to Asia via its hub in Helsinki.

In Asia Singapore Airlines said on Monday it was suspending all services between Singapore and Moscow until further notice for “operational reasons”.

Korean Air, Japan Airlines and Japan’s ANA Holdings said on Monday they were continuing to use Russian airspace but had no plans to add flights to Russia or Europe to replace flights cancelled by European carriers.

Passenger demand to Japan and South Korea has been low due to COVID-related travel restrictions.

In Russia, Aeroflot said on Sunday it would cancel all flights to European destinations after European Union foreign policy chief Josep Borrell said the EU had decided to close its airspace to Russian traffic.

The United States is considering similar action, but has yet to make a final decision, according to U.S. officials.

The U.S. government said on Sunday citizens should consider leaving Russia immediately on commercial flights, citing an increasing number of airlines cancelling flights as countries close their airspace to Russia.

(Reporting by Anne Kauranen in Helsinki, Maki Shiraki in Tokyo, Joyce Lee in Seoul and Aradhana Aravindan in Singapore; editing by Jason Neely)

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