- Thomson Reuters
There is a lot to be figured out following the Brexit vote Thursday, and no one is certain how the negotiations with the EU will work in the following months and years.
But, it looks like airlines serving the United Kingdom will not come out on top.
The number of passengers traveling to the UK is expected to fall by 3 to 5% in the next four years, according a report from the International Air Transport Association.
Freight and regulation bodies will also be affected by Britain’s exit. Freight shipments leaving the UK are expected to fall, and the regulatory environment will necessarily change, but it’s uncertain if this will be positive or negative for Britain, according to IATA.
Europe is, unsurprisingly, the largest destination for UK travelers, representing 49% of British travelers.
Because of the vote, many airline stocks fell on Friday. American Airlines fell 10.8%, United tumbled 9.1%, and Delta slid 8.1%. The S&P 500, in comparison, lost 3.6%.
Investors should focus on airlines in the US market if they want to put money in the sector, Michael Linenberg, an analyst at Deutsche Bank, said in a note to clients.
‘We continue to favor domestic names such as Southwest, Spirit Airlines, and Jet Blue, which should gain from a favorable leisure/discretionary travel outlook,” Linenberg said.
Stocks everywhere, including airlines, continued to fall on Monday following the Brexit vote.
- Google Finance