Financial setback for US airlines seen as unlikely

US airlines will not suffer major financial harm as a result of the terror plot that was foiled in Great Britain yesterday because the latest threat is not likely to deter large numbers of travelers from continuing to fly, industry analysts and Wall Street traders said.

``This event is much less significant than 9/11," said Allen Michel , a professor of management at Boston University who follows airlines. ``People are going to continue to fly. We'll have a new set of rules about hand luggage, and the extreme would be no hand-carried baggage. But to the extent people are inconvenienced, I think by and large people will accept it as something the government needs to do for their security."

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

And, since airlines are not likely to see a drop in business, these people said, they are then not going to be inclined to offer consumers great airfare deals, as happened in the aftermath of the World Trade Center attacks in 2001 when carriers cut prices to woo worried travelers back.

``I think it's going to have a bigger impact on travelers than on the airlines," said Dan Kasper , managing director of LECG LLC , a Cambridge aviation consulting firm.

Amtrak spokesman R. Clifford Black said several high-speed Acela trains between Boston, New York, and Washington ran ``extremely full" yesterday, but the railroad won't be able to say until today how much ridership grew because of airport woes. Amtrak reservations centers got 15 percent more calls than normally expected yesterday, Black said.

For air travelers, aside from triggering a new set of rules for what passengers can carry on planes -- and longer security lines and confusion -- the alleged plot broken up by British authorities ``didn't really change any of the fundamentals for the industry."

US airlines racked up $40 billion in losses since the Sept. 11 terrorist attacks and the recent soaring costs of oil. But in recent months carriers have finally found solid footing, raising ticket prices and flying smaller, fuller planes. Even bankrupt Delta Air Lines Wednesday reported its first quarterly operating profit in six years.

``Don't forget the airlines are in much better shape than they were for 9/11," said Ann H. Heffron , a Zacks Equity Research stock analyst. ``So any impact from terrorism will not be as gut-wrenching as the changes brought by 9/11."

Indeed, Wall Street largely shrugged off yesterday's news. Shares of American Airlines parent AMR Corp. closed unchanged yesterday at $20.29. United Airlines parent UAL Corp. was down 0.6 percent at $23.66, and Continental Airlines Inc. was down 1.5 percent at $23.86.

Stocks of European airlines took a bigger hit, reflecting fears that trans-Atlantic travel may more likely see a decline in business than domestic US travel. Shares of British Airways, which will face huge new security expenses at Heathrow Airport in London, fell 5.1 percent, while Deutsche Lufthansa AG and Air France-KLM Group fell about 3 percent.

Henry H. Harteveldt , a Forrest Research travel analyst, said a key development for the airline industry will be how long the US and British governments keep the terrorist threat level for trans-Atlantic flights between the two countries at the maximum, and whether that level is assessed on other international trips.

``If this thing drags on, absolutely there will be an effect. But you may end up seeing some people fly into Paris and then take the Eurostar train into London," or take other steps to avoid London airports, Harteveldt said.

One area of airline travel that may see some price breaks is business-class tickets for trips between the United States and Britain, said Kevin Mitchell , chairman of the Business Travel Coalition , which lobbies for corporate travel planners on aviation industry issues.

He noted that a ``considerable amount" of travel to the United Kingdom has already been canceled this week because of security concerns as well as airport hassles. ``Business travel to the UK will likely remain off if corporations and travelers are not confident that the threat has been eradicated," Mitchell said, which may pressure airlines to curb business-class fares that have been rising recently.

Mitchell also speculated that foreign airlines could pick up some business from US travelers who have the option of choosing a non-US-based airline for international travel, given that jets from American, Continental, and United airlines were reported to be targets for the alleged attack.

Material from wire services was used in this report. Peter J. Howe can be reached at howe@globe.com.