"Carriers shudder, wonder"

Friday, August 11, 2006

Carriers shudder, wonder
Threat has potential to scuttle recent profits rebound
By Chris Walsh
The Denver (CO) Rocky Mountain News 


News of the foiled terrorist plot sent ripples through the aviation
industry, affecting everything from security lines to airport shops to
airline stocks.
 
Denver International Airport's major airlines experienced some systemwide
disruptions that led to delays, particularly in the morning. 

Frontier Airlines said early Thursday that most of its flights would be
late, though its operations smoothed out later in the day. Southwest
Airlines said it experienced periodic delays in Denver, as did United. 

United and other airlines allowed customers to make changes for travel to
London without penalties. Frontier waived change fees on all its flights;
Southwest doesn't assess such charges in the first place. None of those
airlines offers nonstop service between Denver and London. 

British Airways is the only carrier that does. The airline pushed back its
Thursday night departure at DIA to early this morning, according to its Web
site, after its Denver-bound flight from London was diverted to Chicago. 

Airport businesses were affected differently, largely depending on their
location. 

Stores in the main terminal reported a dearth of business throughout the
day, as travelers' top concern was getting through security, not shopping
for gifts or grabbing a bite to eat. That held true even when security lines
thinned in the afternoon. 

"We just haven't seen many people at all today," said Joe Rana, a co-owner
of Yaz Jewelry and Gifts. "They all walked right past to the security
checkpoint." 

Some businesses in the concourses beyond security reported an afternoon
surge in traffic. 

Denver's Picture Show Popcorn, located on the A concourse, said business was
dead in the morning. That changed at about 11 a.m. 

"We've been swamped since then," manager Krystal Kumpula said Thursday
afternoon. 

A likely explanation: Travelers were still heeding advice to show up three
hours before their flight but were able to breeze through security, giving
them plenty of time to spend in the concourses. 

Businesses said they had been warned by airport officials that they might
not be able to sell any beverages in portable containers starting today. The
Transportation Security Administration said it was still hammering out
security procedures. 

Shares of U.S. airlines were mixed on Wall Street as investors digested the
latest threat to commercial carriers. 

Many airline stocks dropped sharply Thursday after the markets opened but
managed to recover later in the day. 

Shares of United Airlines, Denver's largest carrier, had plunged as much as
8 percent but closed the day down 1.3 percent. Other airlines, including
Continental and American, finished in negative territory. 

One of the lone standouts was Denver-based Frontier Airlines. The carrier's
stock dipped in early trading but finished up 5 percent. 

Analysts and industry experts said the foiled plot won't have much impact on
airline stocks going forward despite renewed terrorism fears. 

"Airlines' stocks had already given up a lot of gains - they're already
trading pretty low as it is," said Helane Becker, an analyst who follows the
industry for securities firm Benchmark Co. in New York. "I don't think this
incident is going to be long-lived." 

One local company's stock greatly benefited Thursday. Golden-based Isonics,
which had seen its shares on a downward slide, rebounded, jumping 31 percent
to 80 cents per share. The company has been developing detection devices for
explosives and chemicals. 

Warren Laird, a spokesman for Isonics' outside public-relations firm, said
the company's newest products can detect TATP, a peroxide-based explosive
used in last year's London subway bombings. Isonics did a public
demonstration of its new products in late July, and has been manufacturing
them in hopes of rolling them out this month. 

The heightened terrorism concerns threaten to derail the airline industry's
fledgling recovery. Many carriers, having battled through the 2001 terrorist
attacks, an economic downturn and high fuel costs, reported profits in the
last quarter. 

But airlines and travel agencies reported few passenger cancellations
Thursday, and experts say the news won't be enough to dampen record demand
for air travel. 

If there's any impact, some say, it'll be on shorter flights, where
consumers might decide to drive if they have to arrive at the airport three
hours ahead of time anyway. 

"I think society is beginning to understand this is going to happen," said
Chris Russo, president of local travel agency Travel Junction. "I just don't
foresee this kind of thing making people stay home." 

The day at DIA 

   . Airport businesses: Sales were slow in the morning. Business remained
sluggish all day for some stores in the main terminal but picked up for
those in the concourses on the other side of the security checkpoints. 

   . Local airlines: Experienced flight delays and some other disruptions
but weren't forced to cancel flights in Denver. British Airways'
London-bound flight was delayed until this morning. 

   . Airline stocks: Shares of most U.S. carriers, including United
Airlines, fell modestly Thursday. Frontier Airlines' stock bucked the trend,
rising 5 percent.

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