Airline, Travel Stocks Take a Shellacking
{{#rendered}} {{/rendered}}The stocks of major airlines and travel-related companies fell sharply Monday with Wall Street extremely jittery about an industry facing long-term financial woes, and in some cases bankruptcies, in the wake of terrorist attacks.
Shares of AMR Corp., the parent company of American Airlines, plummeted $12.50, or 42 percent, to $17.20 in early trading on the New York Stock Exchange. Shares of UAL Corp., the parent of United, dropped $12.62, or 40 percent, to $18.20 on the NYSE, where Delta plunged $17.15, or 46 percent, to $20.10 a share.
US Airways Group Inc. shares were down $5.13, or 44 percent to $6.49, while those of Southwest Airlines slipped $5.78, or 31 percent, to $11.74 - both on the NYSE.
{{#rendered}} {{/rendered}}Northwest Airlines Corp. fell $7.07 to $12.55 on the Nasdaq Stock Market.
Travelocity.com Inc., an Internet travel agency, dropped $10.36, or 47 percent, to $11.66 on Nasdaq while its rival Expedia Inc. was down $10.28, or 28 percent, at $25.97.
Major carriers have lost some $1 billion in the past week as a result of reduced demand from fearful travelers, extensive losses from a two-day aviation shutdown after the attacks and higher expenses from tough new security requirements.
{{#rendered}} {{/rendered}}American, Continental, Delta, Northwest and United have announced severe scheduling cutbacks. Delta expects to fly 75 percent of its normal schedule, while American, Continental, Northwest and United plan to operate at 80 percent of their normal schedules.
The industry was already struggling under a large debt burden and rising costs of labor and fuel, as revenues from business fliers dropped alongside the nation's economic performance, while carriers cut fares to compete for remaining passengers.
Analysts say the industry could lose more than $4 billion this year.
{{#rendered}} {{/rendered}}Carriers are expected to appeal to the federal government this week for a government bailout of between $10 billion and $20 billion that includes direct aid, low-interest loans, tax relief and a takeover of insurance liability from claims related to the terrorist acts.
The Air Transport Association, an industry organization, said last week's attacks show the interconnection of aviation security and national security and that the government should play a greater role in aviation safety.
``We need a financial package to stabilize the industry in this difficult time,'' said Mike Wascom, a spokesman for the association.
{{#rendered}} {{/rendered}}National Airlines of Las Vegas announced Sunday it was cutting back its operations by 20 percent and laying off 300 workers, leaving it with 1,000 employees. Midway Airlines of North Carolina closed down last week while in the midst of reorganizing its financially troubled business, laying off 1,700 employees.
In Europe, shares of Swissair fell 11.2 percent at the start of trading Monday. Shares fell as low as 51 Swiss francs ($31.50) on the Zurich exchange before rallying slightly. Swissair stock has lost a third of its value since last Tuesday's attacks.