Another Icelandic Volcano, Another Threat to Airline Profits
The news this week is eerily similar: Grimsvoetn, one of the most active volcanoes in Iceland erupted this weekend. The eruption closed the country's airports, and its ash cloud is on its way toward the northern U.K. and Europe. Forecasters predict that ongoing activity from Grimsvoetn will effect European air traffic as soon as this Tuesday.
Many of the airlines likely to face profit erosion due to the eruption are Europe's flag carriers. British Airways (BAIRY) flights would be particularly affected. But U.S. carriers with routes to and from Northern Europe could be hurt as well, among them American (AMR), Delta (DAL), and US Airways (LCC) . Shares in domestic airlines are already down about 15% over the last six months.
So far, the volcano's largest impact has been to keep air traffic south of Iceland. But, as a story inThe Telegraph reads, "The ash could force the authorities to shut airports and close UK airspace, in a move which could disrupt many thousands of passengers almost exactly a year since a different Icelandic volcano closed airspace across Europe."
For airline stock investors, it's worth watching. In Europe, shares have already started to sell off.