It did not take long for the first repercussions of Russia’s invasion of Ukraine to arrive. The price of oil skyrocketed and, consequently, the drop in stock market shares around the world was evident.
The Russian stock market experienced a huge 50% drop in the last few hours. Brent crude oil broke above $100 per barrel in London for the first time since 2014.
As for airlines, Aeroflot Group shares fell -29.08% at the close of trading on the Moscow Stock Exchange.
European and Asian airlines also suffered declines in shares of varying levels:
- IndiGo: -10,76%
- Easyjet: -5,90%
- Grupo IAG (Aer Lingus, Air France, Iberia, Iberia Express LEVEL y Vueling): -4,94%
- Lufthansa Group (Austrian, Brussels, Eurowings, Lufthansa y Swiss): -6,47%
- Air France-KLM: -6,28%
- Japan Airlines: -6,24%
- Grupo SAS: -1,65%
- Ryanair: -2,41%
Wizz Air is the second-largest company in Ukraine, and in the face of this situation, the company’s shares in London fell by 10.7%. During the beginning of the offensives, four aircraft and their crews were trapped in Kiev/Zhuliany and Lviv.
First falls
At the time of writing, the first drops were being felt in Latin America and the Caribbean. LATAM Group, the most important in the region, registered at 12:16 (GMT -3:00) a fall of -2.14%; Azul -8.66%; GOL -5.58%; and Aeromexico -5.31%.
Meanwhile, U.S. airlines are also being impacted. At this hour, United Airlines is down -4.17%; American Airlines -2.67%; and Delta Air Lines -4.12%.
According to specialists in the airline-commercial economic market, there are four main risks to supply chains.
The physical availability of commodities produced in Ukraine and Russia (specifically natural gas and oil) would raise global commodity prices, which would increase inflationary pressures.
Physical disruption of logistics networks, as flights are diverted around the conflict zone; transportation insurance costs are likely to increase, and expanded sanctions could complicate customs and invoicing activities.
It should be noted that a large number of flights pass through Russian and Ukrainian territory for cargo movement between Asia and Europe, connecting mainly Paris, London, Hong Kong, Frankfurt, Seoul, and Shanghai with each other.
At the time of writing, Japan Airlines announced that it would suspend its flights to the Russian capital for security reasons and Moldova decided to close its airspace.
Another situation, no less important, is that the price of airline tickets is increasing at the same time as the price of crude oil continues to rise, putting in check the plans for recovery and growth of an industry hit by the COVID-19 health crisis.
See also: Russian attack on Hostomel airport, AN-225, and NATO SALIS program base
