Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Online
August 10, 2006 01:00 AM

News of the foiled terrorist attack targeting U.S.-bound airplanes...

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    News of the foiled terrorist attack targeting U.S.-bound airplanes from London's Heathrow Airport hurt the U.K. stock market today as well as shares of British Airways PLC, Continental Airlines Inc., United Airlines Inc. and American Airlines Inc. - the four airlines whose planes were reported to be targets of the attack.

    The FTSE 100 slid 37.1 points, or 0.63%, to close at 5,823.40. British Airways fell 19.75 pence (33 cents), or 5.06%, to close at 370.25 pence. In late afternoon trading on Nasdaq, United was down 54 cents, or 2.27%, at $23.29; on the NYSE, American parent AMR Corp. was down 15 cents, or 0.74%, at $20.14; and Continental was down 63 cents, or 2.6%, at $23.58.

    Jim Corridore, airline equity analyst with Standard & Poor's, said this morning's events were "the straw that broke the camel's back" in terms of recommending airline stock to investors. The rating agency today downgraded its fundamental outlook on the airline industry to neutral from positive as a result of the alleged plot.

    High oil prices and a seasonally weaker travel period put airlines in a precarious stock position even before today's news, he said. "Now we think it's too risky to advise investors to aggressively purchase airline stock," he said. "We see more negatives than positives."

    Mr. Corridore said he anticipates an earnings recovery for U.S. airlines later this year and into 2007, but right now there is little incentive to invest in the industry.

    S&P also downgraded American Airlines two notches to "hold" from "strong buy" and downgraded Continental Airlines one notch to "hold" from "buy." Although the U.S. Department of Homeland Security did not identify the airlines that were intended targets, three U.S. carriers - American, Continental and United - are the primary servers for the route between London and the United States. The firm is not yet rating United, which recently emerged from bankruptcy.

    "Airline stocks have been knocked severely," said Nick van den Brul, London-based aviation analyst at BNP Paribas. "They will recover, but it's hard to say when, depending on the details to come on what the police actually say. It may take those airlines directly affected a little longer than the rest."

    Keith Bowman, London-based equity analyst at Hargreaves Lansdown Stockbrokers, added that it will take at least a day or two for investors to assess the underlying economic factors. "We've had these impacts before, and normally, the market recovers fairly quickly," Mr. Bowman said. "In the greater scheme of things, concerns about interest rates, the shadow of inflation and the slower pace of the economy are the big factors going forward; one shouldn't get too carried away with the short-term impact."

    "Today's terrorist scare ... highlighted the fact that markets have been complacent about geopolitical risk by not factoring in a high enough risk premium," Ted Scott, manager of F&C Asset Management's Growth & Income fund, said in a news release.

    "There is often a knee-jerk reaction to stocks that are directly affected by unpredictable events such as the terrorist alert this morning," he said. "Airlines, travel companies and related businesses will be affected, but they are likely to bounce back soon." If the planned attacks had proceeded, "we might have seen markets drop a further 10% as they did following the Sept. 11 attacks," he said.

    Airline and airport debt-related credit ratings will likely remain unchanged, said Gregory Clifton, senior analyst for corporate finance at Moody's Investors Service. But the alleged plot did expose some of the industry's financial vulnerabilities, he said.

    "As many U.S. carriers have only recently begun to restore financial stability, these developments could interrupt the progress of this recovery," he said. "At a minimum, airlines will experience higher costs related to the disruption of their networks caused by cancellations, delays and rerouting stemming from today's events." Despite the risks, however, "most airlines have the financial capacity" to deal with today's events, he said.

    Timothy Riddle, Chartwell Investments managing partner and CEO, said he did not foresee an immediate negative effect on the U.S. equity market; in fact, he thinks the airline and other travel sectors may see increased investment activity.

    "Unless it escalates, we don't think there's any major impact," he said. If transport and travel-related stocks take a dip, Chartwell "may have an opportunity to jump into" those investments. "Right now there's not a tremendous amount of information available, but we're monitoring the situation very closely," he said. Mr. Riddle declined to comment further until after the firm has had an opportunity to talk with all of its clients.

    Recommended for You
    martin_luther_king_day_generic_i.jpg
    No P&I Daily on Martin Luther King Jr. Day
    Closed sign
    No P&I Daily over the holidays
    Happy_Thanksgiving_i.jpg
    No P&I Daily for Thanksgiving holiday
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing