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Airline and OTA shares slide amid Trump confusion

February 2, 2017 Headline News No Comments Email Email

Following the weekend’s sudden executive order on immigration security by US President Donald Trump, US airline and online booking agency shares have slumped for two consecutive days.

Trump issued his order on Friday, US time, leaving airlines and travel agencies struggling to work out what was going on. Share prices of major US airlines and third-party travel booking sites fell.

Trump’s sudden edict banned the arrival of visitors or migrants from seven named majority-Muslim countries for 90 days: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.

It also affected air crew and it caused chaos and confusion at airports. Travellers in the air with legal entry visas arrived to find they were no longer permitted to enter the US.

Reuters reported that American Airlines Group shares dropped 2.1% on Tuesday to USD 43.96. United Continental Holdings stock price slid 2.89% to USD 69.65.

American Airlines chief executive Doug Parker, writing on a company website,  called Trump’s order “divisive” and added that it had caused “difficult operating conditions” for some employees.

“As a global employer, however, this Executive Order does not affect the values that this company is built upon – those of diversity, inclusiveness and tolerance,” Parker said in the memo.

Reuters said shares in Delta Air Lines fell for a second day on Tuesday and were down about 5% since Friday. Share prices of big online travel agencies Expedia and Priceline also fell.

Expedia said the travel order “could have a detrimental impact on its business and employees, as well as the broader US and global travel and tourism industry”.

Airlines and travel companies are bewildered by the speed and lack of notice with which the new US Administration is pushing out edicts. IATA has asked the new US Administration to give airlines some notice in future before imposing such measures.

IATA said Trump’s executive order was “issued without prior coordination or warning, causing confusion among both airlines and travellers. It also placed additional burdens on airlines to comply with unclear requirements, to bear implementation costs and to face potential penalties for non-compliance.

“We ask for early clarity from the US administration on the current situation. Moreover, we urge all governments to provide sufficient advance coordination of changes in entry requirements so that travellers can clearly understand them and airlines can efficiently implement them.​”

MEANWHILE, new data released on Friday showed the US economy slowed sharply in the final three months of 2016, largely due to falling exports. This slowed growth to its lowest rate since 2011, the US Commerce Department reported.

For the full year, the economy expanded 1.6%, one percentage point below the level achieved in 2015.

Written by Peter Needham

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