With Airports across Europe closed or semi-closed for the past 4-5 days, it’s time to consider what effect this might have on the Euro.
For those of you who don’t know what I’m talking about, a few days ago a volcano in Iceland erupted spewing out a massive cloud of volcanic particles which has settled over much of Europe.
Airports in Britain, Netherlands, France, Germany, and so on have virtually closed leaving thousands of passengers stranded with no way to get home.
The reason is that these volcanic particles are a massive hazard to airplanes. They simply can’t risk flying through them. In the past, this kind of cloud caused airplanes to lose their engines in mid-flight, not something that anyone wishes to risk.
Due to lack of substantial winds the cloud has not yet moved or dispersed sufficiently in order to allow the airports to open. This means that for several days now, tens of thousands of scheduled flights have not been able to take off as planned.
There is no end in sight yet as winds have not picked up and the volcano is still belching thick clouds of particles every once in a while.
This has serious financial ramifications as airlines are losing an estimated $200 million dollars for each day of inactivity.
As this has been going on for a while with no end in sight, it’s unclear how hard these airlines will be hit. What is certain is that they don’t have the insurance to cover this kind of calamity.
The biggest problem is for European airlines who are nearly completely grounded. While US airlines and from other parts of the world may not be able to fly to Europe, they can still fly to other continents.
For some European airlines, this may be a death sentence.
This may affect the Euro, negatively, of course, as this will have an impact on Europe’s economy as a whole. You can’t eliminate the possibility of a future bailout for some of these firms. A little more spending on behalf of the European Union may drive the Euro down further.
We shall all have to wait and see how things develop. It doesn’t look good, that’s for sure.
