$6 BILLION wiped off airline stocks before lunchtime!
http://biz.yahoo.com/rb/010917/busin...ocks_dc_5.html
Monday September 17, 12:27 pm Eastern Time
Airline Industry in Crisis, Stocks Dive
By Kathy Fieweger
CHICAGO (Reuters) - The beleaguered airline industry lost about $6 billion in total market capitalization as stocks of the top six U.S. airlines plunged by as much as 50 percent on Monday when trading resumed for the first time since hijacked planes were used in devastating attacks last Tuesday.
Shares of one smaller carrier, Phoenix-based
America West Holdings Corp. (NYSE:AWA - news) plummeted 67 percent, racking up the worst share price losses among the top 10. Faring the best in the widespread sell-off was No. 7 Southwest Airlines (NYSE:LUV - news), down 23 percent.
Shares of No. 1 airline AMR Corp.(NYSE:AMR - news), the parent of American Airlines and TWA, were down 37 percent to $18.74 with No. 2 UAL Corp.(NYSE:UAL - news), parent of United Airlines, down 39 percent to $18.82. Delta Air (NYSE
AL - news), the third-largest carrier, was down 40 percent to $22.41.
Shares of No. 4 carrier Northwest Airlines (NasdaqNM:NWAC - news) fell 33 percent to $13.19 and No. 5 Continental Airlines (NYSE:CAL - news), the last of the top 5 to open for trading, was off 50 percent to $19.95.
The S&P Air index was also down sharply, about 30 percent lower at 376.57, while the overall S&P 500 index was down 3.4 percent at 1055.37.
American, the world's largest carrier, saw the initially largest decline in market capitalization of $1.82 billion to $2.76 billion. Market capitalization is calculated by multiplying a company's share price by the total number of shares outstanding.
LOSSES GROWING DAILY
After three hijacked commercial jets attacked landmark U.S. buildings and a fourth crashed last Tuesday, U.S. airspace was closed for two days, causing an estimated $300 million in daily industry losses. New figures released on Monday show U.S. bookings fell 74 percent between September 11 and September 14, according to international reservations system Amadeus.
Continental on Monday said it will miss $70 million in payments on enhanced equipment trust certificates, known as ETCs, which are securities backed by aircraft. Holders of this debt get first claim on the jets in default situations.
The Houston-based company said it has a five to 10 business day grace period starting Monday to make the payments, before it goes into default under its financing agreements.
``They need to conserve cash,'' said Michael Boyd, president of the Boyd Group consulting firm in Evergreen, Colorado.
Boyd was very pessimistic on the outlook for all U.S. carriers in the wake of tighter Federal Aviation Administration security requirements. He called the measures ``ham-fisted'' and said they would only make matters worse for carrier.
More airlines over the weekend slashed scheduled services and weighed deeper job cuts ahead of urgent meetings with the Bush administration set for Tuesday.
All five top U.S. carriers have now cut scheduled service, measured by available seat miles, by 20 percent.
Job cuts have also begun, with Continental on Saturday saying it would lay off 12,000 workers, or 21 percent of its total work force.
The No. 6 U.S. carrier, US Airways Group (NYSE:U - news), plans to announce similar schedule cuts and some layoffs later this week, union officials told Reuters. Shares of US Airways were down 42 percent to $6.70.