The week kicks off with massive upheaval in the global airline sector, stemming from the widening conflict in the Middle East, which has led to widespread flight cancellations and significant operational adjustments.
The week kicks off with massive upheaval in the global airline sector, stemming from the widening conflict in the Middle East, which has led to flight cancellations and significant operational adjustments.
US and Israeli forces struck Iran on 28 February, with Tehran responding a day later by firing missiles of its own at the UAE, Qatar, Bahrain, Jordan and Kuwait.
The ensuing conflict has ground air travel in the region – home to some of the busiest airline operations – to a halt.
Indeed, the Gulf’s three big operators Emirates, Qatar Airways and Etihad Airways suspended all operations – through 2 March so far – as the conflict continued.
Their abrupt absence has been felt around the world, underpinning how vast their international operations are and, more significantly, the importance of Dubai, Doha and Abu Dhabi as global hubs.
Images online show Emirates Airbus A380s – a symbol of the airline’s global reach – parked in airports as far away as Melbourne and Mauritius, awaiting their return to Dubai.
Other airlines globally have suspended operations to the Middle East, and rerouted flights around the conflict zones.
The conflict has another, far-reaching consequence: oil prices in the wake of the attacks spiked – as much as 13% – as trading resumed, and as the attacks disrupted oil shipments from the region.
While the initial spike moderated slightly, prices on Monday were still higher than at the close of 27 February (before the attacks took place) and the start of the year. This has led airline share prices – starting with those in Asia-Pacific – to fall.
That this conflict comes off an otherwise positive airline earnings season is perhaps a stark reminder of the immense uncertainty that confronts the sector.
The coming week will see the financial results of two operators: Lufthansa Group and Turkish Airlines, both of which have been operationally impacted by the ongoing conflict. Of interest will be to what extent the conflict is impacting the two operators – and the wider airline sector.
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