International Consolidated Airlines (ICAGY) shares fell the most in more than two months in early Tuesday trading after as investors responded to an IT outage at the group's British Airways division which left tens of thousands of passengers stranded over one of the busiest travel periods of the year.
IAG stock fell more than 4% at the opening bell before paring losses to around 2.6% to change hands at 597.1 pence each, outpacing the 1.38% decline for the Stoxx Europe TMI Airlines index.
British Airways was forced to cancel its entire schedule from both London airports -- Heathrow and Gatwick -- on Saturday after its IT system collapsed following a power surge which ultimately led to disruption for more than 300,000 passengers. A slow start getting back up systems into operation meant that the airline wasn't able to resume flights until Sunday although a backlog of passengers waiting to travel meant that disruption lasted well into Monday.
British Airways now faces a potentially hefty bill to compensate passengers whose flights were either delayed or cancelled that some analysts have pegged at more than £100 million ($128 million).
The broader airlines sector slid broadly in early trading after European budget carrier Ryanair plc(RYAAY) - Get Report said that it will continue to cut air fairs during the coming year, in order to take a greater share of the market, prompting fears for industry margins that are already being pressure by rising fuel costs.
Reports of the IT outage drew widespread criticism from British media and union representative, with one senior representative telling Britain's Guardian newspaper that it "could have all been avoided. BA in 2016 made hundreds of dedicated and loyal IT staff redundant and outsourced the work to India. BA have made substantial profits in for a number of years, and many viewed the company's actions as just plain greedy."
British Airways generated around half of IAG's £22.5 billion ($28.8 billion) in total revenue last year, according to the company's 2016 annual report. Heathrow Airport moved around 75.7 million passengers last year, its website indicates, and normally handles around 206,000 passengers each day from around 1,200 flights. Gatwick moved 3.8 million passengers last month, according to its most recent traffic update, an average of around 127,00 per day.