European tourism sector suffers its biggest stock market decline since 2022

01-04-25

In March 2025, the European tourism sector experienced a significant stock market contraction, registering a decline of 11.08%. This decline represents the biggest monthly fall since June 2022, when the sector plummeted 14.84% amid the Russian invasion of Ukraine. So far this year, the sector has accumulated a loss of 9.75%, according to the Stoxx 600 Europe tourism and leisure index.

Several factors have contributed to this decline. Geopolitical uncertainty stemming from the trade war with the United States has generated volatility in European markets. In addition, the temporary closure of London Heathrow Airport on 21 March, caused by a power outage due to a substation fire at Hayes, affected more than 270,000 passengers, causing cancellations, diversions and delays to scheduled flights.

Among the major airlines in the sector, Lufthansa showed resilience by increasing its value by 2.64% during March, accumulating an annual rise of 14.77%. In contrast, International Airlines Group (IAG), parent of British Airways, suffered a fall of close to 20% in March and an annual decline of 5.95%, influenced by the closure of Heathrow and pessimistic US airline forecasts for travel demand.

Despite this outlook, some financial institutions maintain an optimistic outlook. JP Morgan, for example, has initiated coverage of TUI, one of Europe's leading tour operators, with an ‘overweight’ recommendation and a target price of 12 euros, which implies an upside potential of 70%. The analysts highlight TUI's improved asset mix and its focus on an asset-light business model, as well as the continued improvement of its balance sheet and the possible resumption of the dividend from fiscal 2026. 

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