View Full Version : Airline Shares Set For Freefall

The Guvnor
12th Sep 2001, 13:23
From today's Scotsman:

Airline shares set for freefall
Andrew Murray-Watson

SHARES in the world’s airlines are set to go into freefall when markets reopen today in the wake of the devastating terrorist air attacks on New York and Washington.

European carriers all saw their stocks slump before trading was suspended yesterday, after all flights leaving Europe to the United States were cancelled.

Aviation analysts widely believe that the Lockerbie crash in 1988 involving a terrorist bomb onboard a Pan American Boeing 747, which killed 259 people, was a primary cause behind the collapse of the airline and fear the industry could suffer in a similar manner after yesterday’s events.

Yesterday afternoon’s trading saw Lufthansa shares plummet 21.95 per cent, British Airways collapse 22.73 per cent, Air France fall 15.63 per cent and Alitalia drop 9.85 per cent.

BA, Lufthansa, Turkish Airlines, Spain’s Iberia, Olympic Airways and Air Lingus said they had recalled flights en route to the United States.

BA and Lufthansa, Europe’s two largest carriers, added that their transatlantic flights had been re-routed - in Lufthansa’s case planes west of Greenland would land in Canada.

Meanwhile the Canadian government, which has shut all its airports, said it would only give access to US-bound planes which have been diverted, and to humanitarian missions.

Meanwhile, on the ground Rome’s Fiumicino airport and Spanish airports were put on maximum alert. Airports in Frankfurt,
Athens and Lisbon were operating normally.

Olympic’s director of flight operations, Spyros Lambropoulos, said it was too soon to measure any financial damage, though it would depend on when US airports open. Air France said it has formed a crisis team to look into the impact of the blasts.

The future for American Airlines and United Airlines, the two carriers which had plans hijacked now looks uncertain. BA has a lose alliance with American Airlines and could suffer a knock-on blow.

United Airlines it had grounded all its operations worldwide and is working with authorities after two of its aircraft were
involved in the terrorist attacks.

[ 12 September 2001: Message edited by: The Guvnor ]

12th Sep 2001, 16:18
Y'know, Guv, the one certainty about going round claiming 'The world is doooomed!', is that one day it will be true. That doesn't make your incessant doom-saying any less tedious. get your self a sandwich board and start wandering the streets of Glasgow; you might get a more sympathetic hearing. Incidentally, how are shares in the all-conquering tartan Tristars, then?

12th Sep 2001, 17:36
The optimists view ...

But some people believe the attack could actually trigger a global economic turnaround.

Central banks have hinted that they will make credit cheaper. Analysts expect further sharp interest rate cuts both in America and Europe.

While companies and consumers will find it cheaper to invest and spend, the US government will go on a massive spending programme, both to rebuild and to improve its defences.

Taken together, this massive demand should boost the economies in America and Europe, and could set them back on track for global recovery

Oh and UK unemployment is STILL falling

.. Someone has to be positive!!

12th Sep 2001, 18:45
at least your dreamworld raises a smile. You and the Guvnor obviously live in parallel but opposite dimensions, far removed from Earth. However, I think that his 'Scotsmsn' article is probably not far off the truth. The thing is, when you know the bottom's about to fall out of your world, you don't need some idiot with a bit of paper telling you so.

12th Sep 2001, 19:10

I'm with RVR on this. I think if we talk ourselves into a recession, that is exactly what we're gonna end up with.
You've got to be strong and oppose anything that these terrorists would want us to do.
Go out there and carry on normally. HOPE that interest rates will come further down and live the life we're meant to.
Yesterday's events will have a dark cloud over all of us, but the best thing we can do is make sure that the [email protected] don't achieve their goal.

12th Sep 2001, 20:31
Typical, 10,000 dead and The Guvnor worries about share prices. :rolleyes: :mad: :rolleyes:

12th Sep 2001, 21:33
To continue on from Stop Start`s posting, the shares will recover or new investments found, BUT WHAT ABOUT THE 1000`S WHO HAVE LOST LIVES AND 10`S OF THOUSANDS OF FAMILY MEMBERS AFFECTED, lets keep thinking of these of these people.

To the bloke who originated this thread get your priorities sorted.

The Guvnor
12th Sep 2001, 21:44
Stop Start - no, I'm not worried about share prices - I'm worried about my colleagues and friends on here who will probably lose their jobs as a result of any severe downturn affecting the air transport industry; and about those 'wannabes' that want to get into the business - and now will either have to give up their dreams entirely or postpone them for a very long time indeed.

Qantas have already said that they cannot now consider bailing out Ansett because in the current market environment post yesterday's terrible events they will not be able to raise the additional capital they require. So that's 15,000+ living people I'm worried about.

Midway Airlines in the US announced that they have closed the doors - it was in Chapter 11 and has now gone into liquidation (Chapter 7); and that's a further 1,700 living people and their families I'm concerned about.

Wednesday September 12, 12:08 pm Eastern Time

Press Release

SOURCE: Midway Airlines Corporation

Midway Announces Suspension of Flight Operations

RALEIGH-DURHAM, N.C., Sept. 12 /PRNewswire/ -- Midway Airlines announced today that effective immediately it has suspended all future flight operations. This action is being taken at this time in order to preserve the value available for Midway's interest holders and with the recognition that following the recent terrorist attacks demand for air transportation is expected to decline sharply.


Holders of tickets for future travel on Midway will be entitled to refunds or recommendation on other air carriers. Midway will attempt to contact all such ticket holders to make appropriate arrangements.


Approximately 1,700 Midway employees will lose their jobs today as a result of this suspension of operations. Final pay will be made to these individuals on their next regularly scheduled payday.


Effective immediately, Midway will begin returning aircraft to their lessors and will solicit purchasers for the various assets it own or controls. Midway anticipates paying all obligations incurred following its Chapter 11 filing and proposing a Plan of Reorganization to deal with all obligations which arose prior to the Chapter 11 filing.

A Midway spokesperson commented, "We are deeply troubled by the impact this action will have on our customers, employees, creditors and community. Unfortunately, we simply do not have the resources necessary to permit us to reorganize in this environment".

SOURCE: Midway Airlines Corporation

On top of that, both American and United are going to be hit with billions of dollars worth of lawsuits as the airlines in the US are responsible for security:

Asked about security breaches at the airport, Logan Aviation Director Thomas Kinton said that while MassPort runs the airport, the individual airlines are responsible for hiring security companies and personnel.

"There are a number of airline requirements in accordance with FAA regulations," Kinton said. "Security checkpoints are the responsibility of the air carrier ... we are [now] taking that extra step of going to the security checkpoints and looking at those issues going forward, as to whether [security workers] should be federal employees, or employees of law enforcement, or airline employees."

If they lose the lawsuits - which will be years down track; or they lose passenger confidence - which will be pretty much immediate - then those carriers could well fold. As the Scotsman article sid, it was the loss of confidence in Pan Am that really was the final nail in its coffin. Without the lifeblood of cashflow flowing through its veins, an airline is as dead as the victims of yesterday's terrorist atrocities.

So it's the tens of thousands of living people (and their dependents) employed at those companies that I'm concerned about.

I think it's you that needs to get his priorities straight.

12th Sep 2001, 22:38
Also been hinted that if there is more action in the Gulf, this could drive up oil prices - this will hit all airlines hard.

13th Sep 2001, 01:06
Doesn't seem right that a babaric act of such magnitude by (probably) middle east terrorists should be helping the middle east economy by driving oil prices up.
Lets hope the situation doesn't escalate as it did in the gulf war. I hope President Bush considers ALL the effects of his retaliation before he goes ahead.

Yes, we need to do something but there's no point going in all guns blazing with a knee jerk reaction if it's not going to achieve something. It needs to be part of an integrated worldwide policy which IMPROVES worldwide stability by uniting countries against terrorism.

All countries are distancing themselves from this in fear of retribution from 'Dubya' - even Gadaffi!!. I hope that these tragic events can be used as a 'heads up' that terrorism is a major threat and something needs to be done. The US can no longer pick and choose what to get involved with, the fight has come to them. Until a solution to the Israel / Palestine crisis is found I fear the USA will never be able to have credibilty in the Mid-East. They need to get involved as Clinton did.

It worked in Northern Ireland where peace seemed impossible, agreement was found. Obviously there's still a long way to go but at least there's hope.

I just pray Bush doesn't retreat into 'Fortress America' with Star Wars etc.

Oh, and next time maybe they'll have a Nuke strapped in the airplane......now there's an incentive.

Hope that's cheered you all up, off to get my sandwich board and cheep bottle of bourbon

13th Sep 2001, 01:24
I have to jump the The Guvnor's defence on this one.

True there has been a dreadful human catastrophe in terms of loss of life and injury, but life has to go on (and get back to normal as soon as possible as a message to the terrorists that they will not succeed), so it is not callous to remark on the economic impact that this disaster will have.

What made me sick was to hear the London stock broker on the radio who said he had Americans on the phone to him first thing this morning asking which stocks would recover quickest. How inhumane, insensitive and greedy can you get.

13th Sep 2001, 01:56
Well the flatmates bro is staying in a hotel in NY and they've trebled the hotel rate.

Shallow or what? :confused:

13th Sep 2001, 02:12
1 word

13th Sep 2001, 02:19

It was Clinton's getting involved with the Palestinians that CAUSED this. The first bombing of the WTC in 93 happened while things were looking like they were going to be sewed up quickly.

The HAMAS and whatnot are AGAINST peace with isreal. The only thing we could do to make them happy would be to nuke isreal. As Isreal is not a terrorist state and they are, we simply cannot do that.

As they are supported by the people, the time has come to lose the reigns on Isreal and let em do whatever it takes.

There will never be peace like you think, you are dreaming.

BTW, the IRA just renouced their committments to disarm...


The Guvnor
13th Sep 2001, 03:23
As prophesised, Ansett has now gone into receivership. Hopefully - but in view of recent events, highly unlikely - someone will pick up the pieces. Virgin Blue is said to be interested in parts (10 aircraft and 1,000 staff) and there are rumours of interest by Lufthansa as well.

My suspicion is that this will be the second of many airlines to fold over the next few months.

From today's Australian:

Ansett calls in receiver

ANSETT Holdings was placed in voluntary administration last night after Qantas said the airline's problems were too great for it to take on.

In a terse statement, the Air New Zealand board said it had made the move to enable Ansett to keep trading while new expressions of interest were pursued.

PricewaterhouseCoopers was appointed as voluntary administrator, a form of receivership that leaves the company a slim chance of survival.

Spokeswoman Robyn Newman said Ansett would operate as normal today, and that the airline was still taking forward bookings.

"We don't have any deadlines imposed around the voluntary administration so the immediate message is we're still flying," she said.

"We're still going to be operating some 400 flights a day and we have around about 30,000 customers booked tomorrow."

The announcement ended a confusing day in which the Qantas rejection was followed by two further proposals from Air NZ.

Qantas looked at Ansett's books but joined Singapore Airlines in concluding the loss-making airline was too much of a liability.

"The numbers didn't stack up for what we're doing," Qantas chief executive Geoff Dixon said.

Transport Minister and Acting Prime Minister John Anderson said he was disappointed at Qantas's decision, but recognised Qantas had to put shareholders' interests first.

The decision to place Ansett in administration gives some breathing space to the airline's 16,000 workers.

Air NZ originally threatened to place Ansett in liquidation last night, after legal advice that directors could no longer leave the company or themselves exposed to the Australian carrier's losses.

The move came after Air NZ unsuccessfully tried to convince the Australian Government it should liquidate Ansett and start a new low-cost airline called Ansett 2.

The Kiwis wanted Canberra to underwrite Ansett's operating losses and pay out redundancies.

The Government's refusal to come to the party leaves an employee buyout by a consortium of Ansett pilots, engineers and management as the airline's last hope.

But this hinges on government support to keep the airline flying.

The Ansett Pilots Association said it had started talks with several leading investment banks and a "significant international airline". The union would not name the airline but industry speculation centred on Star Alliance partner Lufthansa.

The consortium has retained New York management buyout specialist Keilin & Co and legal firm Corrs Chambers Westgarth for the bid.

The Australian Licensed Engineers Association called for government backing for the voluntary administrator for 30 days, and proposed a restructuring that would see the airline publicly listed in 12 months.

It called on the Government to back Ansett for 30 days while the administrator investigated restructuring the airline with staff equity participation.

The Government would not comment on the Ansett 2 proposal but repeated it did not support a full bail-out. Mr Anderson's office did not rule out other means of support.

The fate of worker entitlements remains in doubt, and unions are expected to take court action in an attempt to secure them.

The corporate watchdog will seek assurances about the employee entitlements and check on solvency.

"We are particularly concerned to receive an early assurance from the administrator that Ansett is able to pay in full all employee entitlements," Australian Securities & Investments Commission chairman David Knott said. "We will also be asking the administrator to provide an opinion on Ansett's compliance with the solvent trading provisions of the Corporations Act."

The Australian Services Union described voluntary administration as "the least worst option".

"This is a time when cool heads have to prevail," said ASU assistant national secretary Linda White.

"We have an aviation meltdown in the US and globally. This is not the time to make pre-emptive decisions and we say the Australian Government has got to be prepared to put in some money to keep it trading."

Ansett employees filed into a briefing at Sydney airport by the airline's airport manager, Geoff Stirk.

Most talk from staff was of lost opportunities for the once strong airline and betrayal by governments and directors.

"Air New Zealand over-extended themselves and never really had the capital to buy us in the first place," said five-year employee Rod Chapman.

Opposition transport spokesman Martin Ferguson described the airline's collapse as a monumental crisis that should have been avoided.