European Airline Stocks Tumble as Heathrow Closure Sparks Travel Disruptions

Major European airline stocks fell on Friday after London’s Heathrow Airport, the region’s busiest hub, announced a full-day closure due to a fire at a nearby electrical substation supplying its power.

Key Airline Losses

Following the market opening, several European airline stocks declined:

• International Consolidated Airlines Group (IAG) (LON: ICAG) plunged 3.5%
• Wizz Air Holdings (LON: WIZZ) dropped 2.53%
• Air France-KLM (EPA: AIRF) fell 3.14%
• EasyJet (LON: EZJ) declined 1.82%
• Deutsche Lufthansa (ETR: LHAG) lost 2.5%

Mass Flight Cancellations & Travel Chaos

• Heathrow Airport warned of “significant disruption” in the coming days.
• Flight tracking service Flightradar24 reported that over 1,300 flights to and from Heathrow could be cancelled today.
• Passengers have been advised to avoid travelling to the airport until further notice.
• Airlines anticipate disruptions extending at least 24 hours or potentially longer.

Financial Impact & Compensation Costs

• Jefferies analysts noted that IAG is the most exposed airline due to British Airways’ reliance on Heathrow.
• Weekend flights account for 0.4% of IAG’s 2025 available seat kilometres (ASKs), amplifying operational risks.
• Compensation costs are projected to impact IAG’s 2025 EBIT by 1-3%, driven by:
  • Passenger compensation claims
  • Flight rescheduling and crew dislocation expenses
  • Operational inefficiencies

Outlook: Extended Disruptions & Investor Caution

With Heathrow operations yet to resume, investors remain wary of further losses for European airline stocks. Extended flight cancellations and compensation payouts could further weigh on earnings, particularly for British Airways and other Heathrow-dependent carriers.