Air Canada stock tumbles nearly 11% amid new COVID variant concerns
Air Canada's stock (AC.TO) sank as much as nearly 11 per cent on Friday as concerns about a new variant of COVID-19 detected in South Africa roiled markets around the world.
The Montreal-based company was one of many airlines and travel industry firms that saw shares tumble on Friday after Europe said it would impose restrictions on travel from several African countries.
European Union countries have agreed to introduce restrictions on all travel from seven countries in Africa, including Botswana, Eswatini, Lesotho, Mozambique, Namibia, South Africa and Zimbabwe, according to a spokesperson for the EU Commission. The U.K. has also suspended flights from six African nations over the new variant, which experts have called the "worst we've seen so far."
Air Canada's stock fell as much as 11 per cent in early trading on Friday. It ended the trading day at $21.24 per share, a decline of 9 per cent compared to Thursday's close.
In the U.S., Delta Air Lines, United Airlines and American Airlines all fell more than 10 per cent on Friday. As of mid-day, Delta was down 8 per cent, United fell 10 per cent and American tumbled 9 per cent.
The new travel restrictions are a blow to the airline industry, which had started to see demand recover in recent months. Last month, Air Canada's chief executive officer Michael Rousseau said the company was "now in recovery mode" as revenue nearly tripled, thanks to increasing demand. According to the company, booking levels for some regions were equal to the demand seen in 2019, before the COVID-19 pandemic struck.
"There's no doubt that the length of the recovery has moved in from the consensus of 2025 to at least 2024 and maybe 2023," Rousseau said.
Whether the new COVID-19 variant disrupts this timeline remains to be seen. The World Health Organization designated B.1.1.529, calling it Omicron, as a variant of concern on Friday.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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