CHICAGO (CBS.MW) - The airline sector hit its lowest point since the Amex Airline Index was activated in April 1996, with the index down 39 percent at 72.32 at midday Monday.
The industry collapsed with all stocks sharply lower - none down less than 20 percent and at least one dropping 70 percent.
The top five airline companies dropped better than 40 percent out of the gate. And in a harbinger of what lies ahead for smaller airlines, America West shares tumbled 70 percent, trading recently at $2.80, down $5.80.
In midday action, UAL Corp. (UAL: news, chart, profile), parent of United Airlines, was down 41 percent, or $12.62, to $18.21; AMR (AMR: news, chart, profile), parent of American Airlines, dropped 40 percent, or $11.72, to $17.98; Delta (DAL: news, chart, profile) retreated 39 percent, or $14.49 to $22.80; Northwest (NWAC: news, chart, profile) was off 32 percent, down $6.27, to $13.35; US Air tumbled 45 percent, or $5.26, to $6.36.
Continental (CAL: news, chart, profile) opened last, crashing 49 percent, or $19.29, to $20.40.
America West (AWA: news, chart, profile) dropped 70 percent at the open, and at midday was trading recently at $2.89, down $5.71 or 66 percent.
Travel-related Internet stocks plunged in concert with airline shares. See full story.
After an unprecedented two-day shutdown of the nation's airspace and a restart with strict security measures that cost the industry an estimated $1 billion, airlines are operating at about 72 percent capacity, according to the Allied Pilots Association.
Over the weekend, every major airline, along with most smaller carriers, said they expect to operate at less than full capacity in the near-term, with expectations ranging from 70 to 80 percent.
That promises to maim an already seriously crippled industry.
Before Tuesday's attacks with hijacked airliners in New York, Washington, D.C. and Pennsylvania, the industry was expected to lose an accumulated $2.3 billion. That projection has now been doubled - and that's just on the perceptual fallout. What happens over the next two to three week ultimately will paint the industry's third- and fourth-quarter outlook.
Industry leaders are pleading for federal help. "We need our Congress to intervene and save our industry," Continental's Chief Executive Gordon Bethune said Sunday. "The U.S. airline industry is in an unprecedented financial crisis."
Continental Airlines was the first to announce layoffs - 12,000 or 21 percent of its workforce - and warn that it could face bankruptcy as soon as next month.
Plans to extend U.S. airlines $15 billion in aid surfaced Friday on Capitol Hill, but the House balked at passing such a package overnight as some members said additional time was needed to study the measure. See full story.
Bethune said "immediate" action is required from Congress.
Late Saturday, Sen. John McCain said he was "extremely concerned" about the future of the industry and promised to help. "I will do everything in my power to ensure that Congress will act to stabilize the financial condition of the airlines as we begin to rebuild from this tragedy and restore our nation's confidence in flying," he said in a statement.
And on Sunday, Vice President Dick Cheney said the Bush Administration "was open" to funneling money into the industry.
Last Monday, before the attacks, airline stocks closed at or near 52-week lows as the industry was primed for another round of ugly passenger numbers. The Amex Airline Index ended the session at 116.97 - a level it hasn't seen in more than four years.
On Tuesday, almost in tandem with the first reports of the attack on the World Trade Center, UBS Warburg analyst Sam Buttrick sent a note to clients upping to $2.3 billion his full-year net loss for the industry. Coincidentally, he also upgraded to "buy" his recommendation on American parent AMR.
The next day, he issued another report, doubling his loss estimates.
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B5FA80C72%2DD6FA%2D4056%2DB81A%2D5A9A2C33EEBA%7D |
