The First Ebola Case in the U.S. Is Also Scaring Investors
This story has been updated. The Ebola outbreak has been hammering the economies of West Africa for weeks. The first confirmed Ebola case inside the United States is now hitting the nation’s biggest airlines, raising fears that the American economy could start to feel the disease’s impact as well. The stocks of airlines Southwest, American, ...
This story has been updated.
The Ebola outbreak has been hammering the economies of West Africa for weeks. The first confirmed Ebola case inside the United States is now hitting the nation’s biggest airlines, raising fears that the American economy could start to feel the disease’s impact as well.
The stocks of airlines Southwest, American, and Delta each fell roughly 3 percent Wednesday, Oct. 1, as investors worried that travelers would stay home out of fear of contracting the deadly virus. The drop-off came as a top official in Texas, where 42-year-old Thomas Eric Duncan was diagnosed with the disease, admitted that hospital officials had accidentally discharged the Liberian man after employees of the facility failed to "fully communicate" to colleagues that he had just arrived from Africa, where the disease has already killed more than 3,300 people. Texas health officials said Thursday that they were monitoring 80 people who had come in contact with Duncan for Ebola symptoms, up from 18 on Wednesday. Gov. Rick Perry said that five school-age children were screened after coming in contact with the patient.
Spokespeople for the airlines said they were in constant contact with the Centers for Disease Control and Prevention (CDC) and were taking an array of steps to prevent sick passengers from boarding their flights or making it to the United States. CDC Director Tom Frieden, for his part, said there was "zero risk of transmission on the flight" that the patient took. A spokesperson for United Airlines told CNN that Duncan had flown part of his trip on one of its planes.
U.S. stocks fell all the same, the clearest indication to date that the Ebola virus could hit American companies even if it doesn’t kill or infect many people within the mainland United States. (Markets around the world closed lower Wednesday, but analysts said those declines had more to do with poorer-than-expected manufacturing numbers in an array of countries.) The Ebola-related decline in the U.S. stock market so far seems limited to the airline industry, but other sectors of the economy, particularly the hotel industry, could also feel the pain if new cases of the disease pop up elsewhere in the country.
To be sure, Ebola’s economic impact on the United States to date completely pales in comparison with the devastation it has wrought in West Africa, which is ground zero for the disease, and may never come close to causing as much damage. The World Bank estimates that Guinea’s GDP will shrink between 3.5 and 4.5 percent this year as Ebola roils the agricultural sector and discourages regional trade. Liberia’s finance minister, Amara Konneh, lowered the country’s previous 5.9 percent GDP growth estimate because of the outbreak. Bismarck Rewane, CEO of the Financial Derivatives Company, a Lagos-based financial advisory and research firm that manages $18 million in assets, told CNBC Africa on Aug. 18 that Nigeria could lose at least $3.5 billion of its $510 billion GDP. Moody’s has already warned that the virus could hinder the region’s energy sector.
Sen. Ron Johnson (R-Wis.), who sits on the Foreign Relations Committee and was a delegate to the U.N. General Assembly session last week, said the development should cause U.S. officials to "immediately reconsider our protocols" for keeping deadly viruses such as Ebola at bay as well as travel restrictions to hot-zone countries.
"Everyone was hoping it wouldn’t come to our shores, but it’s here," he told Foreign Policy, adding that now the government needs to figure out how that happened.
Spokespeople for an array of U.S. airlines said they were taking appropriate precautions. A JetBlue spokeswoman said airlines and airports have reminded passengers to follow CDC guidelines on traveling when ill and to take precautions to stay healthy. American Airlines spokeswoman Andrea Huguely said the carrier follows CDC guidelines for airlines to protect the health of customers and crew and noted that the Liberian national hadn’t flown any part of his trip on the airline. Huguely also stressed that "American Airlines does not fly to Africa."
Victoria Day, a spokeswoman for the Airlines for America trade group, said U.S. carriers operating in Ebola-stricken countries have procedures in place to prevent sick passengers from boarding their planes.
"Primary and secondary screening is underway at the points of departure in Ebola-affected countries in West Africa by those governments in accordance with [World Health Organization] recommendations," Day told FP.
Delta, and United did not immediately respond to requests for comment. Speaking to CNN later Wednesday, a United spokesperson pointed to Frieden’s comments that passengers on the Liberian’s flight were safe because Duncan "was not symptomatic until several days after his trip and could not have been contagious on the dates he traveled."
Robert Mann, an aviation analyst and former airline executive, said he thinks air travel is absolutely safe. He said the drop in air traffic to Africa doesn’t hurt U.S. carriers that much because they don’t have many routes there.
"This is an overly dramatic response to a situation that will undoubtedly be contained," Mann said in a phone interview.
Mann said he doesn’t expect Ebola to hit airlines the way severe acute respiratory syndrome (SARS) did in 2003. The big difference: SARS can be transmitted through the air and Ebola cannot, according to the CDC.
"If you look at the analog of SARS, in that case, which was a full-blown epidemic, the U.S.-Asia airline market was down by about 30 percent for more than eight weeks and it recovered after six months," he said.
In a macabre version of a silver lining, companies working on Ebola drugs saw their shares gain Wednesday as news of the infected passenger buoyed pharmaceutical companies with vaccines or treatments for the disease in the pipeline. Canadian biotech company Tekmira Pharmaceuticals gained $4.11, more than 17 percent, to close at $27.85 after the company said it may start clinical trials for an Ebola drug later this year. NewLink Genetics, a company working on an Ebola vaccine, rose $1.53, or about 7 percent, to $22.95. Sarepta Therapeutics, which is also developing an Ebola treatment, was up 3.7 percent, or $0.78, to $21.88.