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Airline Stocks Bounce Back as Coronavirus Drug Hopes Rise - Barron's

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Airline stocks have bounced back after reports of a vaccine breakthrough in the fight against the coronavirus and as the British Airways boss played down the virus’ impact on the industry.

Shares in BA parent International Consolidated Airlines (IAG) climbed 6.5% on Wednesday as the sector made a recovery along with major European indexes, despite the virus death toll rising to 490 in China.

German carrier Deutsche Lufthansa rose 5.5% and Air France-KLM jumped 4.8%.

Global stocks climbed higher on Wednesday as investors turned positive over the containment and treatment of the spreading virus.

Chinese state media reported that researchers at Zhejiang University had found two drugs that can treat people with the virus. Separately, a team of U.K. scientists leading research into a vaccine have made a “significant breakthrough,” according to Sky News.

Airline stocks have been among the worst affected by the virus, as thousands of flights to and from mainland China have been canceled.

American Airlines and United Airlines both suspended flights to Hong Kong on Tuesday due to weak demand, having already halted flights to China. Nonetheless, shares in both rose in premarket trading. A number of airlines, including Cathay Pacific, British Airways, Lufthansa and Finnair have also canceled flights to China.

However, industry leaders played down the virus’ impact on the air travel industry at an aviation event in Doha.

IAG chief executive Willie Walsh said the impact of the coronavirus on air travel demand would be marginal, Reuters reported.

Walsh, who will step down next month, added that the industry was “without question” healthy enough to absorb a significant downturn in the Chinese economy.

Qatar Airways Chief Executive Akbar Al Baker, addressing the same event, said aviation was as safe as any other form of mass transport following the outbreak.

Email: editors@barrons.com

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