Houston Community News >> Foiled Terrorist Plot
8/10/2006 -- The ink barely dry on second-quarter results showing fuller planes and profits some hadn't seen in years, airlines are again being tested -- this time by a foiled terror plot that is sure to make passengers uneasy about flying.Advertisement
The financial toll on the carriers and whether they will have to scrap their higher ticket price strategy depends on how long the threat lasts, analysts and industry consultants said on Thursday. But, they pointed out, the airlines have been able to weather such upheaval before.
"Just when they've gotten up and are walking, something like this knocks them down again," said Terry Trippler, an industry expert in Minneapolis. "It's going to be difficult the next 48 to 72 hours, but it will settle down. It always does."
Advanced bookings have been strong and some airlines began offering fare sales this week to help keep seats filled during the traditionally slow early fall season. That should help the airlines withstand a big financial impact from the terror threat, experts said. "This industry, which is still trying to recover, doesn't need the effects that we might have here," said David Treitel, chief executive of aviation consulting firm SH&E in New York.
That said, Treitel noted this isn't the first time the industry has had to deal with terror threats or actual attacks. "The strength and resiliency of the business is I think going to manage this situation very effectively so that we won't have much more than the added inconvenience through the next few days," he said.
The plot involved liquid explosives and targeted flights from Britain to the U.S., officials said. U.S. authorities heightened security at airports across the country and raised the threat level to "red" for flights from Britain, the first time the highest threat of terrorist attack had been invoked since the system was created. All other flights were under an "orange" alert -- one step below red.
Shares of some major airlines sank, meanwhile, and passengers fretted in long lines at security gates at airports. Fort Worth, Texas.-based American Airlines parent AMR Corp.'s stock closed unchanged at $20.29, after having fallen earlier in the day. Shares of Elk Grove Village, Ill.-based UAL Corp., the parent of United Airlines, fell 1.3 percent to close at $23.52. Houston-based Continental Airlines Inc. shares fell 1.5 percent to close at $23.86.
At Heathrow Airport in London, all short-haul inbound flights had been canceled with several outbound flights also canceled or delayed. Analysts said the main impact on airlines will come immediately from the cost of canceled flights and in the longer term from extra expenditure on security.
The International Air Traffic Association said it was still too early to tell what effect the terror plot would have on the air industry. A spokesman said Thursday's events could not be compared to the terrorist attacks five years ago in the United States that sent the air industry spiraling. "We need to remember on Sept. 11, we had four aircraft go down and a huge number of casualties," spokesman Anthony Concil said. "In this case, we saw that the security system worked. There was no aircraft that suffered a breach of security. No one has lost their life."
UAL posted a second-quarter profit of $119 million, its first quarterly profit in six years. It cited higher fares and packed planes. AMR posted a sharply higher profit for the second quarter. It was only AMR's second profitable quarter -- excluding those helped by one-time items -- in the past five years. Discounters Southwest Airlines Co. of Dallas and AirTran Holdings Inc.'s AirTran Airways of Orlando, Fla., also reported wider profits in the second quarter, with Southwest's earnings more than doubling and AirTran's nearly tripling. Higher fares helped both.
Don't expect travelers to be running away in droves just yet. Atlanta-based Delta Air Lines Inc. said it was operating a normal schedule. At U.S. airports, many passengers said they are used to the terror threats by now, while other said they have no choice but to take a plane to where they are going. "At our age we haven't got too many flights left anyway," said 82-year-old Paul Garcia, who showed up at Hartsfield-Jackson Atlanta International Airport on Thursday three hours early to catch a plane to White Plains, N.Y.
People had been waiting up to two hours at security checkpoints at the world's busiest airport in terms of passengers. People waited hours at U.S. airport terminals to reach security checkpoints. They were ordered to dump all liquids -- water bottles, suntan lotion, even toothpaste. At Minneapolis-St. Paul International Airport, frequent traveler Sheila Grossinger said she's used to the occasional inconvenience.
"When you travel a lot, you have to learn to be adaptable, but it seems like every few months now there's a new restriction," Grossinger said. At Kennedy Airport in New York, Sonia Gomes De Mesquita, 40, waited nervously to board a British Airways flight home to London. Her family had urged her not to fly. "You wake up and what are you going to do?" she said. "The flight is today."
Trippler, the Minneapolis industry expert, said that likely will be a common attitude among passengers. "If people already have their tickets, they'll probably still go," Trippler said. "But I think it would be foolish to say that some people won't change their plans. The full impact remains to be seen." Associated Press Writers Patrick Condon in Minneapolis, Giovanna Dell'Orto in Atlanta, Jane Wardell in London and AP correspondent Bradley S. Klapper in Geneva contributed to this report.
(Contributed by AP)