Christmas Bomb Scares Likely To Have No Effect

Industry analysts expect little movement on airline stocks in response to the attempted bombing of NWA flight 253 and a second scare on Sunday.  Experts foresee little change in airline traffic volume, so stock prices shouldn't dip.

Roger King, an analyst for CreditSights in New York, told the AP that in November the volume of people flying was up 2 percent compared with a year ago.  Airline stocks started to regain value during the second half of 2009 as people began flying again and ticket prices edged up.  Stock prices for the parent companies of American, Delta, and Continental roughly doubled since July 1 while United's shares tripled in value.

King thinks these markers will overshadow any individual security events for Wall Street investors.  In December 2001, shares of major airline companies barely budged on the Monday following the arrest of 'shoe bomber' Richard Reid.

"The airline industry is constantly exposed to these types of events," King said. "A failed attempt like that really doesn't do much in terms of revenue."

Analysts expect that even new security procedures that frustrate travelers won't stop them from flying in large numbers or send stock prices down.  Demand from the airlines' high-margin business travelers could be dampened, however, if the new security measures prove to make air travel significantly more onerous, said Kevin Mitchell, president of the Business Travel Coalition.

FMI: www.aa.com, www.delta.com, www.continental.com, www.united.com