Why the Ebola scare led to a 16% drop in the Airline Index

The share prices for major airline companies in the U.S. dropped substantially after the news of the first Ebola case in U.S. on September 30, 2014.

Teresa Cederholm - Author

Nov. 20 2020, Updated 2:00 p.m. ET

Ebola scare impacts Airline Index

In the previous parts in the series, we discussed the intensity of the 2014 Ebola outbreak. We analyzed the estimates and predictions from renowned organizations—the World Health Organization (or WHO) and the Centers for Disease Control and Prevention (or CDC)—on the impact of the outbreak in different countries.

In this part of the series, we’ll discuss how U.S. airline industry investors reacted to the news of the first Ebola case in U.S. on September 30, 2014.


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The share prices for major airline companies in the U.S. dropped substantially. Between September 2, 2014, and October 15, 2014, the NYSE ARCA Airline Index (XAL) dropped by 16%. This was more than double the 7% fall in the S&P 500 Index. The average decrease in share prices for the six major U.S. airlines during this period was ~17%.

  • American Airlines’ (AAL) share price dropped by 27% from $39.17 to $28.58—the highest among its peers
  • Delta’s (DAL) shares had the second highest drop of 20.9%—its shares decreased from $40.93 to $32.38
  • JetBlue (or JBLU) decreased by 18.6%—from $12.64 to $10.30
  • United (UAL) decreased by 14.9%—from $49.99 to $42.55
  • Alaska (or ALK) decreased by 13%—from $48.4 to $41.99
  • Southwest (LUV) was the only airline with a single digit fall of 8.8%—its share price fell from $32.91 to $30.02

Airline stocks in the U.S. took a hit every time a new case was reported. In October there were three Ebola cases in the U.S. Prices fell by an average of 10% during the month.

Investors can invest in individual stocks to benefit from the reduced valuations. Investors can also gain access to the industry through exchange-traded funds (or ETFs) like the SPDR S&P Transportation ETF (XTN).

Similar outbreaks—like severe acute respiratory syndrome (or SARS) in 2003—had a severe impact on air passenger traffic. Travelers were concerned about the disease spreading through air travel.

World Bank supported the efforts to contain the disease. It increased the financial aid to $400 million. The additional money will be used to improve healthcare systems. It will also be used to purchase supplies for treatment in the three African countries that are battling Ebola.


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