Air Canada was the hottest airline stock in the world, two months ago. Today, investors don't even want anything to do with it.
Air Canada shed $3 billion in market value from its peak last month, making it the worst-performing airline on Bloomberg's World Airlines Index for 2019. Air Canada's stocks plunged 28 percent on rising the paranoia that the new coronavirus will wreak havoc on international travel.
On Wednesday, Air Canada announced that suspension of flights between Canada, Shanghai and Beijing will be extended until April 10 due to the epidemic.
Flights from Canada to the two Chinese cities had been put on halt for the meantime starting January 30 until end of February after foreign affairs officials advised Canadians against traveling to China in the midst of the coronavirus's rapid spread in the country.
Fears about the new coronavirus' negative impact on the world economy grew following an increase in new cases reported in South Korea, Iran , and Italy. Italian health officials ordered a travel ban in some areas to prevent the virus from further spreading.
The Centers for Disease Control and Prevention said US nationals should brace for significant distortions to daily life if the virus starts to spread domestically in the US.
US President Donald Trump's advisers were also looking into whether to impose more restrictions on international flights because of the crisis, Larry Kudlow, White House economic adviser, explained.
Air Canada anticipates that its net sales for the first three months this year would be around $200 million less compared to the same quarter in the previous year as a result of the travel bans and the recall of Boeing 737MAX planes.
COVID-19, the disease caused by the coronavirus infection -- has claimed the lives of over 2,600 people and inflicted nearly 80,000 others, mainly in China, the World Health Organization reported. In Canada, health officials have so far confirmed 11 cases of the virus.
United Airlines Holdings Inc., the largest US airline company to China before American carriers called for the suspension of flights, withdrew its profit estimates for 2020, citing uncertainty from the virus.
Last year, Air Canada bagged the world equity title among airlines after its stock surged 88 percent with plans to fast-track its global reach in leisure travel with the procurement of tour operator Transat AT.
Net profits from outside Canada increased to 65 percent of sales in 2019 from 60 percent in 2014, according to figures compiled by Bloomberg. Around one-fifth of Air Canada's capacity is on Pacific destinations.
