How Airlines Feel the Effect of Terrorism

When terrorists strike—as they did during the November 2015 Paris attacks and the March 2016 Brussels bombings—the effects reverberate across the globe. These high-profile and devastating tragedies impact human behavior in a variety of ways, particularly immediately after the event.

People often rethink their travel plans after an attack, becoming more cautious about traveling to certain parts of the world. This change in behavior directly leads to the changes airlines see in the number of passengers booking flights. By reviewing the financial statements for specific carriers, we can get a clearer picture of how terrorism, such as the attacks on Paris and Brussels, affects the airline industry.

Key Takeaways

  • After terrorist attacks, people frequently rethink their travel plans, which can lead to a decline in the number of passengers booking flights and decreased revenue for airliners.
  • After the November 2015 Paris attacks and the March 2016 Brussels bombings, the earnings reports for several European airline carriers showed weakening demand and significant revenue declines.
  • In general, the revenue declines and losses carriers experience after a terrorist attack appear to be short-term, although this is not a hard-and-fast rule.

Predictable Stock Drop Across Carriers

Most of the major European airlines announced their earnings relatively soon after the Paris attacks. A majority of those reports mentioned weakening demand. The effects were worsened after the 2016 Brussels bombings, likely because the attacks occurred in an airport terminal and metro station. 


Europe's largest low-cost airline lost over 10% of its stock value in the six months following the Paris attacks, eventually culminating in a more than 25% loss following the Brussels bombings. 


After the attacks, Europe’s number two low-cost carrier reported a half-year loss of $34.6 million. The company said a few things contributed to these results. French air traffic controllers went on strike earlier that spring, which caused hundreds of flights to be canceled. In addition, the company said the terrorist attacks affected the demand for air travel. The airliner lowered their ticket prices in an attempt to get people back in the air. 

International Airlines Group (IAG)

Subsidiaries British Airways and Iberia, as well as Irish carrier Aer Lingus, stated that demand in March 2016 was notably weaker due to the attacks in Brussels.  "Revenue trends in quarter two have been affected by the aftermath of the Brussels terrorist attacks, as well as some softness in underlying premium demand,” IAG CEO Willie Walsh said in a statement. “As a result, IAG has moderated its short-term capacity growth plans."

Deutsche Lufthansa AG

Commonly referred to as Lufthansa, Europe’s largest airline also reported weakness in the same quarter. They attributed most of their issues with increased competition and pricing. Chief Financial Officer Simone Menne mentioned the company saw weakening demand by both U.S. and Asian group bookings after the Brussels attacks. 

Air France-KLM 

Another of Europe’s large airlines said they lost roughly $76 million in the aftermath of the Paris attacks. The good news for the company is they saw a quick recovery in terms of passenger numbers, reporting these numbers had improved by December.

Delta Airlines, Inc.

Out of the three U.S.-based airlines that fly to Europe, Delta Airlines, Inc. was the only one that mentioned terrorism as having an effect on their business in the first quarter. Delta reported a first-quarter operating revenue decrease of 1.5%. Management reported the Brussels attacks had a $5 million impact on the company.

The Bottom Line

Based on historical evidence, it appears airline stocks decline for the short-term after a terrorist attack. The trend seems to reverse itself rather quickly, as was the case for airliners after the attacks on Paris and Brussels. However, this is not a hard-and-fast rule. For example, the September 11 attacks caused some stocks to drop in an unprecedented fashion over a longer period. American Airlines stock was down over 90% over the year following the attacks. 

Article Sources

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