European airline shares slide on Israel-Iran tensions: Lufthansa, Air France KLM, Airbus shares plunge up to 4%

European airline stocks crash as Israel-Iran war escalates

European airline stocks plunged on June 13 after Israel's strikes on Iran, and the resulting escalations hiked crude oil prices. Additionally, the closure of some airspaces in the Middle East further fuelled the sharp downturn in the sector.

European airline stocks followed their Indian aviation peers, with IndiGo and SpiceJet shares being down up to 4 percent, after the trafic Air India crash near Ahmedabad that caused over 240 deaths.

The shares of Deutsche Lufthansa AG plunged nearly 4 percent, while Air France KLM shares fell over 4 percent on the London Stock Exchange. Easy Jet shares fell over 3.5 percent, while Airbus shares fell over 1.6 percent till a short while ago.

Brent crude oil futures shot up over 9 percent to hit a multi-month high of around $75.61 per barrel. WTI Crude Oil Futures also gained over 9 percent to hover around $74.39 per barrel. The sharp rise in the oil prices came after Israel carried out what it called "preemptive strikes" against Iran.

Israeli Prime Minister Benjamin Netanyahu has said that the airstrikes were aimed at key parts of Iran’s nuclear and military program. "We struck at the heart of Iran's nuclear enrichment program, Iran's nuclear weaponization program, Iran's main enrichment facilities, leading nuclear scientists, and ballistic missile programs," Netanyahu said.

Iran soon retaliated by launching over 100 drones toward Israel. "All [aerial] defense arrays have been operating to intercept the threats. This is a different event to what we’ve experienced thus far, and we’re expecting difficult hours. We should show resilience and patience," Israel Defense Forces (IDF) spokesperson said.

The rising tensions in the oil-rich Middle East led to significant jump in oil prices. This will likely impact airline companies, due to rise in aviation fuel prices.

Additionally, Iran and Israel closed their respective airspaces after the tensions increased. The closure of airspaces will likely affect the airlines who use the route for international travel.

The plane crash near Ahmedabad airport involving Boeing's 737-8 aircraft will likely continue to put further pressure on the shares.