Shares of prominent European airlines dropped on Friday due to a sudden and serious disruption at London’s Heathrow Airport, one of the busiest airports globally.

A fire at an electrical station situated about three kilometers from the airport resulted in a significant power outage that incapacitated both primary and backup power systems.

The fire was contained after approximately seven hours; however, it led to the cancellation of over 1,350 flights, impacting hundreds of thousands of travelers.

British Airways, which has extensive operations at Heathrow, announced that all its short-haul flights from the airport were cancelled.

The airline is currently reassessing its long-haul schedule and has provided affected customers with options for rebooking or full refunds.

International Consolidated Airlines Group (IAG), the parent company of British Airways, saw a 3 percent decline in its share price in the morning, followed by an additional 1.5 percent drop by early afternoon.

Investment analysts have pointed out that while the operational disruption may be temporary, the costs for compensation are anticipated to be substantial.

Financial analysts predict that immediate compensation claims could represent 1 to 3 percent of IAG’s earnings before interest and tax for 2025.

Further costs are also expected from necessary adjustments in crew and aircraft positioning.

Estimates indicate that compensation expenses could be between thirty million and fifty million pounds.

Shares of other major airlines were similarly affected.

KLM-Air France shares fell by 1.5 percent, Lufthansa by 1.7 percent, and EasyJet was down approximately 1 percent by 2 p.m. Central European Time.

Wizz Air and Ryanair, despite not operating directly from Heathrow, experienced declines of 1.4 percent and 0.8 percent, respectively, influenced by overall market trends.

In addition to airlines, related sectors also saw declines.

TUI Group, which operates several airlines in the UK market, reported a 1.8 percent drop.

Intercontinental Hotels Group, a key player in the hospitality sector, experienced a 3.7 percent fall in its share value.

Flight tracking service FlightRadar24 highlighted that the power outage impacted a significant portion of Heathrow’s average daily traffic of around 200,000 passengers.

The airport has urged the public to refrain from traveling to the facility until normal operations resume.

Market analysts have noted a broader downward trend in aviation sector stocks amidst concerns regarding future travel demand and macroeconomic uncertainties, including global trade and tariffs.

IAG shares have decreased by approximately 25 percent since hitting a five-year high in February.