Airline stocks have experienced some turbulence this week as investors try to figure out whether or not the Department of Homeland Security intends to expand its ban on laptops to international flights from Europe.
In the wake of the Manchester bombing, the agency is considering banning all devices larger than smartphones on flights from the U.K. and the rest of Europe, a move that could have a major impact on U.S. airline stocks Delta Air Lines (DAL), American Airlines Group (AAL) and United Continental Holdings (UAL).
The stocks were trading lower in midday trading on Tuesday, with Delta down roughly 3 percent. However, the stocks repaired much of their losses after a European Commission official said there would be “no ban” following a phone conversation with DHS Secretary John Kelly.
“Both sides have agreed to intensify technical talks and try to find a common solution,” the official said.
The rally was short-lived, however, when the agency issued a follow-up statement.
“Secretary Kelly affirmed he will implement any and all measures necessary to secure commercial aircraft flying to the United States – including prohibiting large electronic devices from the passenger cabin – if the intelligence and threat level warrant it,” DHS says in the statement.
The news sent airline stocks back down to session lows, with Delta finishing Tuesday down 3.4 percent.
The issue of laptops on international flights has been in the news since CNN reported in March that U.S. intelligence agencies believe terrorists may have obtained airport security equipment to aid in developing sophisticated explosives that can be integrated into electronic devices, making them extremely difficult to detect.
A similar laptop ban on international flights from certain Middle Eastern countries had a severe impact on international airline Emirates.
“The recent actions taken by the U.S. government relating to the issuance of entry visas, heightened security vetting and restrictions on electronic devices in aircraft cabins have had a direct impact on consumer interest and demand for air travel into the U.S.,” Emirates says in a statement. “Over the past three months, we have seen a significant deterioration in the booking profiles on all of our U.S. routes, across all travel segments.”
For now, airline investors will be watching…
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