Shares of airlines and tour operators lost $22.6 billion in market value due to the conflict in the Middle East
On 2 March, Lufthansa and TUI shares traded nearly 12% lower in pre-market trading after the war with Iran caused widespread disruptions for airlines and tour operators. On Monday, travel sector stocks lost a total of $22.6 billion in market value. The escalation of the conflict disrupted air traffic around the world, led to the closure of key Middle Eastern hubs and pushed oil prices higher. Analysts warned that the disruptions could last for weeks.
The UN's International Civil Aviation Organisation reminded countries of their responsibility for the safety of air transport, infrastructure and passengers. Key hubs in the Persian Gulf, including Dubai, which normally handles more than 1,000 flights a day, remained closed for the third day in a row. Tens of thousands of passengers were stranded. According to Reuters, the industry faced its biggest challenge since the COVID-19 pandemic.
Jordan partially closed its airspace. The US State Department urged Americans to immediately leave more than a dozen Middle Eastern countries, including Saudi Arabia and the United Arab Emirates.
Oil prices rose 13% to their highest level since January 2025 due to intensified attacks between Iran and Israel. This has increased the risk of rising fuel costs for airlines. In the US, Delta Air Lines, United Airlines and American Airlines shares fell by 2%–4%. TUI shares closed down 9.9%, Lufthansa lost 5.2% and British Airways owner IAG fell 5.5%. According to Reuters estimates, 29 leading airlines, hotel and travel companies from Europe, Asia and North America lost a total of $22.6 billion in market value on Monday.
Paul Charles, head of travel consultancy PC Agency, said that all flights are overbooked as people are forced to book whatever options are available. He also said that he himself was stuck abroad. Marriott said its hotels in the region remain open.
JPMorgan, Goodbody and Citi named Wizz Air as the most vulnerable European carrier due to its significant presence in Israel. At the same time, US airlines operate few flights to the Middle East. Jefferies estimates that the region accounts for less than 1% of planned capacity for the first quarter for American, United and Delta, but analysts pointed to the risk of higher fuel prices.
S&P warned of the possibility of the largest oil supply disruption in history if flows through the Strait of Hormuz remain low or are halted. On 1 March, only five oil tankers passed through the strait, compared to about 60 per day previously. Jim Burkhardt, global head of crude oil market research at S&P, noted that if this situation continues for a week or so, it will be a historic event.
A limited number of Etihad flights from Abu Dhabi resumed on Monday. Ben Gurion Airport announced that it would resume operations on a limited basis. The UAE aviation authority said it would begin operating special flights for some passengers. At the same time, many Middle Eastern carriers continued to cancel or suspend flights.
The decline also affected Asian airlines. Shares in Singapore Airlines, Cathay Pacific Airways, Qantas Airways and Japan Airlines closed at least 4% lower on Monday. Cathay Pacific cancelled all flights to the Middle East, including Dubai and Riyadh, and waived rebooking fees. Singapore Airlines cancelled flights to and from Dubai until 7 March, while Japan Airlines suspended Tokyo-Doha flights.
Singapore-based analyst Brendan Sobey noted that Indian carriers are particularly vulnerable due to their significant Middle East schedules for transporting migrant workers and the ban on using Pakistani airspace on flights to and from Europe.
Lufthansa has cancelled passenger flights to and from the UAE. Qatar Airways passengers in Sydney told Reuters that they were trying to change their routes with minimal information. Passengers from Italy reported that their flight to Milan via Doha had been cancelled and they had found an alternative route via Los Angeles with another airline. One passenger said she had not received a response from Qatar Airways by phone and added that the tickets cost 4,000 euros. The Stewarts, both 78, were flying from Sydney to Scotland via Doha, but their flight was diverted to Melbourne. They returned to Sydney and reported that hundreds of people were seeking information in Melbourne after the announcement of the airspace closure.
On 3 March, airline stocks in Asia and Europe continued to decline. Oil prices have risen by about 30% since the beginning of the year. Gulf hubs, including Dubai, remained closed for the fourth day, with tens of thousands of passengers stranded. Paul Charles called it the biggest shutdown since the COVID pandemic.
Qantas Airways shares fell for the second day in a row and closed 1.8% lower. Qantas Airways CEO Vanessa Hudson said the company has fairly good fuel hedging, but the jump in oil prices is significant for the industry. Qantas reported that last week it had hedged 81% of its fuel for the second half of the financial year ending 30 June.
Japan Airlines closed down 6.4%, its biggest drop since April 2025. Korean Air Lines fell 10.3%, its biggest drop since March 2020. Cathay Pacific lost about 3%. In China, Air China, China Eastern Airlines and China Southern Airlines shares closed down 2%–4% in Hong Kong and Shanghai. Taiwan’s China Airlines lost 3% and EVA Air lost 2.5%. In Europe, Wizz Air and IAG shares fell by around 5%.
