Investing.com -- Major European airline stocks fell on Friday after the region’s busiest airport Heathrow said it would remain closed on the day due to a fire at a nearby electrical substation that supplies its power.
Shares in British Airways’ parent company International Consolidated Airlines Group S.A. (LON:ICAG) fell 3.5%, while Wizz Air Holdings PLC (LON:WIZZ) dropped 2.53%, Air France KLM SA (EPA:AIRF) declined 3.14%, EasyJet PLC (LON:EZJ) slipped 1.82% and Deutsche Lufthansa AG (ETR:LHAG) fell 2.5% after markets opened on Friday.
Heathrow warned that "significant disruption" is expected in the coming days, with flight tracking site Flightradar24 suggesting that more than 1,300 flights to and from the airport in west London may be cancelled today.
The airport has advised passengers to avoid travelling there until operations resume. Meanwhile, major airlines have cautioned that disruptions could extend for at least the next 24 hours or longer.
Jefferies highlighted that IAG is most vulnerable through British Airways, as the airline operates extensively from Heathrow, where weekend flights contribute 0.4% of the group’s 2025 available seat kilometres (ASKs).
Compensation is expected to be the most significant immediate expense, with Jefferies estimating a potential impact of 1-3% on the group’s 2025 earnings before interest and taxes (EBIT). The financial implications include increased compensation costs and operational inefficiencies caused by crew and pilot dislocation.
"Disruption is likely to last for several days therefore, in our opinion," Jefferies analysts said in a note.