US airlines stay on long-term recovery path, despite setbacks

NEW YORK - Security fears may dampen demand for air travel in the short term, industry watchers said today, after British police foiled a plan to blow up trans-Atlantic jetliners, but they won't throw US airlines off their long recovery from the September 11, 2001 attacks.

It took US airlines almost five years to regain pre-2001 passenger levels, as Americans regained a taste for travel, helped on by a resurgent economy and cheaper fares. This summer, several carriers reported their fullest planes on record.

The latest travel scare may put a dent in that upswing, as the consequences of the plot unravel, analysts said, but existing concerns about record-high oil prices, an economic slowdown and global security remain more of a threat.

"If you are planning a trip in September, and you haven't booked it yet -- you might not," said Helane Becker, an airline analyst at the Benchmark Co. "But on balance we are expecting Americans are fairly resilient. The only concern we have ... is a potential recession."

Shares of transatlantic air carriers fell in early trading, but recovered later as investors took a more robust view of airlines' prospects.

The plot targeted jets operated by Continental Airlines Inc, UAL Corp's United Airlines and AMR Corp's American Airlines Inc, according to a US official who asked not to be named.

Shares of Continental were down 1.6 per cent at US$23.84 ($38.29) in early afternoon trade on the New York Stock Exchange and shares of AMR were down 0.7 per cent at US$20.16. UAL shares were down 0.7 per cent at US$23.60.

The slight dips come after a 3 per cent drop in the Amex airline index on Wednesday, on fears that ticket price cuts indicated a greater-than-usual dip in demand as the busy summer season winds down.

Shares of other domestic carrier US Airways Group Inc. were down 0.4 per cent, while Southwest Airlines Co and JetBlue Airways Corp were up slightly.

Five years ago, the hijack plane attacks on New York and Washington cut US air traffic by 20 per cent, hastening the decline of four major carriers into bankruptcy, as the industry shed more than 100,000 jobs and lost billions of dollars.

The latest plan for an attack won't have nearly the same effect, analysts said.

"Fortunately, the summer travel season is mostly complete and virtually all trips planned by vacation travelers this month have already been booked," said Standard & Poor's analysts in a report. They did say, however, that widespread concern over security would likely lead to reduced bookings.

Others stressed the ultimate resilience of the air travel market worldwide.

"As we have seen after previous terrorist events -- 9/11, Madrid, Bali and London bombings -- the world will still fly," said Bank of America analyst Robert Stallard.

- REUTERS

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