American stock price closed at $27.05, a 10.8 percent decrease that was the biggest dip among major U.S. airlines. United Airlines stock price dipped 9.1 percent, Delta Air Lines saw shares down 8.2 percent and shares of Southwest, which does not fly internationally to European markets, dropped 3.2 percent.
Overall, major U.S.STOCK INDEXES were down 3.4 to 4.1 percent after British citizens voted to leave the European Union in a Thursday referendum.
The decision creates uncertainty in a number of areas for U.S. carriers, although American is perhaps the most exposed, with 6 to 7 percent of its total capacity touching the U.K., according to analyst estimates. The company operates 25 daily flights to London from the U.S., including three from DFW International Airport.
Friday morning, American didn’t have much to say on the Brexit besides that the company is monitoring the situation.
“We will learn more as the exit process unfolds and any effects of that exit become more clear,” spokesman Matt Miller said.
American has a close partnership with British Airways, with the two airlines sharing revenues on trans-Atlantic flights through an antitrust immunized joint venture that allows them to coordinate on scheduling and marketing of routes.
American also relies on British Airways to connect its customers to many destinations beyond London, a flow that could be disrupted as the U.K. renegotiates “Open Skies” agreements that allow domestic carriers access to foreign markets. Delta, by comparison, has a 49 percent stake in U.K.-based Virgin Atlantic, but also has a close partnership with Air France-KLM.
“There are literally thousands of agreements that are in place in which the U.K. as part of the EU negotiated in good faith and has been living under,” said James Moore, managing director of the Business, Society, and Public Policy Initiative at Georgetown University’s business school. “Now there are going to have to be new agreements that are negotiated.”
In the short term, demand for business travel to and from the U.K. could shrink in the wake of the economic uncertainty and as a weakened British pound makes it more expensive for residents there to travel internationally. A weaker British pound will make travel to the U.K. cheaper for U.S. passengers, however.
Longer term, London’s role as a global economic capital could shrink as businesses reshape their operations as a result of the Brexit.
“There are corporations that have literally used London as their front door to the EU,” said Moore, who previously served as the U.S. assistant secretary of Commerce for Trade Development. “We are rewriting the history books in economics and politically and even to a certain extent militarily. This is brave new world all the way around; how this ends up is anybody’s guess.”
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