(Bloomberg) – European carriers took further steps to avoid Ukraine, while airline stocks fell after tension mounted throughout the weekend over the reinforcement of Russian troops in the border.
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KLM stopped flying to Ukraine on Saturday after the Dutch government raised its alert to red, advising citizens to leave as safety was uncertain.
Norwegian Air Shuttle ASA said on Monday it would stop flying over Ukrainian airspace as a precaution, while two of the country’s airlines resumed flight schedules after disruptions blamed on insurers revoking coverage.
Russia has repeatedly denied its intention to invade Ukraine.
Oil price volatility, fueled by the crisis, is also threatening airline profits.
Shares of Hungarian-based Wizz Air Holdings Plc fell 11%, the biggest drop since November, dragging down European airline stocks. Deutsche Lufthansa AG fell 4.4% at 4:32 p.m. in Frankfurt, while Air France-KLM plunged 5% in Paris.
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Carriers have been reducing their exposure to Ukraine for weeks as diplomats scramble to avoid further escalation. The United States issued a series of warnings amid a Russian buildup of around 130,000 troops at the border.
Airlines have generally avoided flying over Ukraine since 2014, when a Malaysia Airlines Bhd. was shot down over separatist-held territory in the east of the country. Commercial flights are still banned over eastern Ukraine and Crimea.
A spokesperson for Norwegian Air Shuttle said the overflight decision applies to “a very small number of routes” and will not have a significant impact on its operation.
Ryanair Holdings Plc reduced its frequencies in January, while KLM was among carriers that changed their schedules last month to avoid crews spending the night in the Ukrainian capital.
Israel said airlines, including El Al, were adding rescue flights for around 4,500 citizens who requested return flights.
Some flights to Kyiv were still operating as normal, with other services being restored after Ukraine’s cabinet, at an emergency meeting on Sunday, allocated $600 million in guarantees to insurers and leasing companies so that airlines can continue their flights to the country.
Ukraine International Airlines said on Monday it would continue to operate its 16 planes, reversing an earlier shutdown after constructive dialogue with business partners and the government.
Earlier, the carrier said it was sending five jets to Spain and two to Belgrade for maintenance after the termination of insurance for flights in Ukrainian airspace.
Another local carrier, SkyUp, has resumed selling tickets and flying entirely within Ukraine, according to an Interfax report on Monday.
SkyUp had to land a flight on February 12 from the Portuguese island of Madeira in Chisinau, Moldova, instead of Kiev, after insurers announced they would withdraw cover. This has led aircraft lessors to demand that planes be returned to the EU.
The passengers were taken by bus to Kiev, according to a statement from the Ukrainian airline, about a seven-hour drive away.
Wizz said Monday he was monitoring the situation. The low-cost carrier said in January it was ready to move the four planes it bases in Ukraine if necessary.
Swedish company SAS AB said it would continue to fly to Kyiv for the time being and could divert routes if needed. Finnair Oyj, which does not have direct flights to Ukraine, said it was monitoring developments.
Air France planned to operate its flight to Kiev on Tuesday as usual, according to a spokesperson, noting that the rotation takes place during the day without requiring the crew to spend the night.
Flights from Ukraine account for about 3.9% of Wizz’s planned seats this quarter, according to Goodbody analysts, while the Budapest-based carrier’s Russian capacity is about 0.8%.
(Updates with Ukraine International resuming flights from the third paragraph)
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