Asian airline stocks reel from crash


Japan Airlines has confirmed it will buy Japan Air System, the No. 3 carrier, but both stocks were suffering on Tuesday

By Alex Frew McMillan CNN Hong Kong

HONG KONG, China -- Asian airlines reeled Tuesday morning, a day after an American Airlines plane carrying 255 people went down in a New York City suburb.

American Airlines flight 587, headed to Santo Domingo in the Dominican Republic, crashed almost immediately after takeoff into the Rockaway neighborhood, in Queens.

All passengers are presumed dead, and the plane crashed into several houses. Six people on the ground are unaccounted for.

The news prompted a sharp selloff in U.S. airline stocks later Monday, overnight for Asian markets. American Airlines dropped 12 percent to $15.98, its lowest point since 1987.

Rival carriers suffered in sympathy. Delta fell 10 percent, Continental dropped 9 percent and United Airlines fell 6 percent.

Japan Airlines down despite merger

As Asian markets opened on Tuesday, all the region's publicly traded carriers turned down.

Japan Airlines, which gets 15 percent of its sales from flights to the United States, fell 2.69 percent to 289 yen.

Japan Air Systems, Japan's third-largest airline, was off a similar amount, down 2.67 percent at 3,650 yen.

JAL has confirmed that it plans to buy Japan Air Systems by , in an effort to cut costs after the September 11 attacks.

Japan's second-largest carrier, All Nippon Airways, was faring only slightly better, down 2.25 percent at 304 yen.

U.S. market worth $1 billion a day

Airlines around the world have been reeling ever since commercial planes were used to destroy the World Trade Center towers and crash into the Pentagon.


It was an Airbus A300 that went down in the Rockaways, and earliest indications are that the crash was an accident

Carriers like Belgium's Sabena and SwissAir have already been forced into bankruptcy and Canada 3000 became the latest corporate casualty when it filed for bankruptcy last Sunday, November 11.

The U.S. market is worth around $1 billion a day to carriers around the world. Faced with a loss of traffic and the aftermath of September 11, international aviation losses could top $20 billion.

In Asia, stock in Hong Kong's dominant carrier Cathay Pacific was down 1.23 percent at HK$8.00.

Cathay had already suffered a steady stock decline in the second half of the year as the weak economy ate into earnings. It also sold off sharply after the September attacks.

Singapore Airlines, South East Asia's biggest carrier, was down 5.0 percent at S$8.95 in early trade. The downturn in passengers recently caused the company to put off delivery of 10 new Airbus airplanes.

The plane that crashed in New York was an Airbus A300. The earliest indications are that the crash was an accident.

But there are still fears that people will cut back on nonessential travel. Stock in Singapore's neighboring Malaysian Airline System had dropped 1.57 percent to 1.88 ringgit.

Airlines Down Under holding up

Taiwan's airlines were also suffering. Taiwan's second largest carrier, Eva Airways, was off 4.1 at T$6.95. The largest, China Airlines, fell 2.9 percent to T$11.70.

Korean Air Lines was off 2.16 percent at 4,990 won in morning trade. Its local rival, Asiana Airlines, fell 3.5 percent to 1,370 won.

Australia's flagship carrier, Qantas, was posting minimal losses, down 0.5 percent at A$3.84. But the economic slowdown and operational problems had already forced the collapse of its domestic rival, Ansett Airlines.

Australian tycoons Lindsay Fox and Solomon Lew are trying to breath new life into the carrier.

Troubled carrier Air New Zealand was steady, with its B shares - open to overseas investors -- trading at 28 cents.

Asia Pacific airlines were already mulling a pool to combat rising insurance costs in the wake of the September attacks.

The 18-member Association of Asia Pacific Airlines says it is looking for airlines to contribute up to $20 million apiece into the fund, which would make up any shortfall in coverage and pay out claims to members.