"Airlines brace for fallout from London attacks"

Friday, July 8, 2005

TERROR IN LONDON
Blows to Britain reverberate in U.S.
For carriers, more strain in aftermath
By BILL HENSEL JR.
The Houston (TX) Chronicle


If you have a ticket on Continental Airlines to or from the U.S. and Great
Britain for travel between today and July 14, you can reschedule or reroute
your flight once without a penalty.

Thursday's terrorist attacks in London are just one more problem for the
U.S. airline industry, already slammed by high fuel prices and other woes.

Even if the fallout is small - which analysts said it may be - it is not
good news.

Analysts expect to see travel to and from Great Britain drop, which they
said will hurt the airline industry, including Houston-based Continental
Airlines.

Airline stocks were lower Thursday in the wake of the attacks. Standard &
Poor's credit service said it expected business to fall for American, United
and Continental, since London is the single largest European destination for
all three.

"Unfortunately, the attacks come in the midst of the peak summer travel
season and affect a market - trans-Atlantic travel - that has been much more
profitable than the airlines' core domestic markets," Standard & Poor's said
in a report.

Continental reported that 18 percent of its 2004 passenger revenue was from
European routes, the ratings agency said.

"The implications of the attacks could evolve, if there are further
incidents or serious threats or if the attacks have adverse effects on
economic health or raise oil prices," the S&P report said.

Continental's stock closed at $13.31 a share Thursday, down 21 cents per
share.

Large part of revenue

London is expected to be hit hardest by any travel slowdown, because it is
the premier destination for travelers going to Great Britain. 

JPMorgan airline analyst Jamie Baker said Continental gets about 5 percent
of its system revenue from Great Britain. The only U.S. trans-Atlantic
carrier that gets more revenue from that region is Fort Worth-based American
Airlines, at 6 percent, he said.

"Given the size of London's tourist market and disruptions to its
infrastructure, it seems appropriate to expect a slight decline in bookings
over the next six to 10 weeks" for trans-Atlantic carriers, Baker said of
wrote in a report Thursday.

Continental spokesman Martin DeLeon said Thursday there had been no
disruptions in Continental's flights to and from Great Britain so far.

"All flights are still departing and arriving on schedule," DeLeon said.

Because of the attacks, Continental passengers with tickets to or from the
U.S. and Great Britain for travel through July 14 can reschedule or reroute
travel once without a penalty.

British Airways instituted a similar policy Thursday, said spokesman John
Lampl, who added there had been no significant drop in bookings as a result
of the attacks.

"Everything is pretty well operating normally, and Houston flights are
operating OK," Lampl said. "If people do want to change, we will permit
people to change bookings to another date with no penalty."

In addition, travelers who were booked to go to London and want to change to
another location may do so without penalty, as long as they make up the
difference in cost, he said.

No changes of plans

Houston travel agent Florence Kimmons said she hadn't seen any significant
changes in travel plans from her clients as a result of the incidents. 

"I think maybe it will affect leisure, but those plans usually are done so
far in advance, those people are locked in," she said. "I think business
people who have to go will go. That has always been the case with these
incidents."

Josh Romanow, a Washington-based aviation and transportation security lawyer
at Pillsbury Winthrop Shaw Pittman, said he expects airlines to waive fees
for changing near-term travel plans.

On a larger scale, Romanow also said he expects more changes to security on
U.S. rail and transportation systems.


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