Terrorist Plot Drags Airlines

Elena
10 Aug, 2006
New York City

Shares of U.S. airline companies trading in Europe tumbled. American Airlines parent AMR Corp. fell 12.8% to 17.68 euros. Shares of UAL Corp., the parent of United Airlines, fell more than 4% to 18.32 euros. British Airways PLC made the steepest decline among European airlines, falling 3.9%.

[R]8:00AM Airlines and travel companies dropped.[/R]
Airlines and travel companies steeply dropped Thursday after British authorities reported they held 21 people in custody after a terrorist plot to blow up several aircraft in flight between the U.S. and Britain. The plot had targeted United Airlines ((UAUA)), American Airlines ((AMR)) and Continental Airlines Inc. ((CAL)), according to the Associated Press, citing two U.S. counterterrorism officials. Britain''s national security threat level was raised to ‘critical’ from ‘severe.’ The U.S. government raised its threat level for commercial flights to Britain to its highest level.

Shares of U.S. airlines trading in Europe tumbled. American Airlines parent AMR Corp.''s shares fell 12.8% to 17.68 euros ($22.73). Shares of UAL Corp., the parent of United Airlines, fell more than 4% to 18.32 euros ($23.55). Shares of British Airways PLC ((BAB)) made the steepest decline among European airlines because of its heavy exposure to the trans-Atlantic route. Its shares fell 3.9% to 374.50 pence ($7.15) on the LSE. BA said it was experiencing severe operational delays Thursday and it was likely some flights would be canceled. Budget airline easyJet PLC fell 2.6% to 411.75 pence ($7.84), while low-cost carrier Ryanair Holdings PLC lost 2.8% to 7.32 euros ($9.41). Among other airlines, Air France-KLM was down 2.8% to 19.19 euros ($24.68), while Lufthansa was down 3.2% at 14.16 euros ($18.21).


[R]7:30AM Asian markets slip, Japan lower as Sony and Sharp plunge.[/R]
Asian markets were lower in Thursday trading. The Nikkei finished the day down 0.16% at 15,630.91. Trading was cautious as investors awaited quarterly GDP data, which will be released Friday. Electronics exporters Sony Corp. and Sharp Corp. both declined about 1%. Mobile service provider NTT DoCoMo advanced 1.8% on hopes the company will gain subscribers after number portability regulations go into effect in October.

Suzuki Motor moved up 1.6% after saying Wednesday it was lifting its full-year sales outlook to 3 trillion yen from 2.8 trillion yen. The company also said it would build a new plant in Japan to help satisfy strong demand for small cars. It will be Suzuki''s first new Japanese factory in more than three decades. Nissan Motor advanced 0.5%. Banks also gained, after better-than-expected machinery-order data released Wednesday suggested a strong market for corporate loans. Mizuho Financial Group was up 1.5%.

Hong Kong''s Hang Seng Index fell 0.72% to 17,222.14 as investors took profit on blue chips including China Mobile and Henderson Land. China Mobile, gaining 4.5% Wednesday, shed 1.1%, while Henderson Land sank by 1.7%. South Korea''s Kospi index slipped 0.81% after the country''s central bank raised interest rates at mid-morning, increasing the call-rate target by 0.25 percentage point to 4.5%.

Australia''s benchmark S&P/ASX 200 slid 0.52% after Telstra Corp reported disappointing earnings before the market opened Thursday. Miners BHP Billiton and Rio Tinto slipped as a strike continued at their Escondida copper mine in Chile. Elsewhere, China''s volatile Shanghai Composite index rose 1.74% after Air China''s Shanghai IPO, recently downsized following a weak response from institutional investors, met with healthy retail demand.


[R]6:30AM European stocks fell Thursday morning on security issues.[/R]
European markets were lower Thursday morning. The FTSE 100 in London dipped 1.4% to 5,781.2, the Xetra Dax sank 2.1% to 5,585.72, the CAC-40 fell 1.5% to 4,952.28. British Airways shed 4%, Ryanair dropped 3.3% and Lufthansa fell 3.8% on security uncertainty and the impact on travel sentiment as UK airports have introduced a ban on all hand baggage on aircraft leaving the UK, on government advice. Ferrovial, owner of UK airports operator BAA, declined 3%.

Tui, the German tourism and shipping group, sank 6.5 per cent to €14.54 as it warned costs at its shipping division would hit this year’s earnings. Securitas, the security services group, fell 9.7 per cent to SKr120.50 after reporting second quarter earnings fell well below forecasts. Deutsche Telekom lost 8.2% after Europe’s biggest telecom group issued a profits warning and reduced its targets for 2006 and 2007. The telecom sector suffered a blow, falling 3.3 %, with Telecom Italia down 2.8%, France Telecom off 3.1% and BT down 2.6%.

Crude oil prices changed little Thursday as the market remained wary of factors influencing supply in the United States, Africa and the Middle East. Light, sweet crude for September delivery gained 9 cents to $76.44 a barrel in electronic trading on the NYME. September Brent crude futures on London''s ICE Futures rose 25 cents to $77.53 a barrel. Gold opened Thursday at a bid price of $653.10 a troy ounce, up from $652.90 late Wednesday.

The euro gained slightly against the U.S. dollar Thursday as traders absorbed a decision by the U.S. Fed to hold off on any interest rate increases. The euro bought $1.2889 in morning European trading, up from $1.2861 in New York late Wednesday. The British pound edged upward to $1.9074 from $1.9049. The dollar was marginally lower against the Japanese currency, slipping to 115.06 yen from 115.23 yen