Reshma Kapadia
NEW YORK: The crash of an American Airlines jet in New York on Monday will
likely derail the recovery of online travel firms such as Priceline.com Inc.,
Expedia Inc. and Travelocity.com Inc. which had begun after the Sept. 11 attacks
on the United States, analysts said.
"If anyone was on the fence deciding if they should fly into the holiday
season, I think some portion of that is going to be derailed by the crash,"
said Bailey Dalton, analyst at CE Unterberg Towbin. "It's unfortunate
because they were starting to hit their stride."
Many online travel companies reported that bookings had recovered to about 80
per cent of pre-Sept. 11 levels as they headed into the Thanksgiving and
Christmas holidays. Demand for hotel and air travel had fallen dramatically in
the weeks after the attacks as travelers decided to stay at home.
Shares of most of the online travel companies had begun rebounding from lows
hit after the jetliner attacks in New York and Washington caused many travelers
to stay home, but the Monday crash sent the stocks back into a slump.
Priceline's shares fell 6.9 per cent, or 31 cents, to $4.19 on Nasdaq in
early-afternoon trading. Expedia slid 3.5 per cent, or $1.11, to $30.11.
Shares of Travelocity.com, which some analysts said was most exposed to a
decline in air travel, slid 6.5 percent, or $1.01, to $14.55 -- a level not seen
since late September. "This is probably the last thing airlines and online
travel companies needed. Consumer confidence was shaky to begin with and this is
certainly going to put off any recovery," said Jupiter Media Metrix analyst
Jared Blank.
The prevailing thought had been that travel during the Thanksgiving and
Christmas holiday season would reassure consumers that airline travel was safe,
but this crash may keep travelers from making those plans for the holiday, Blank
added.
"Looking into the fourth quarter and first quarter, the outlook today is
worse than it was yesterday. The conclusion I'm coming to is that the fourth
quarter has to be readdressed. The public is not going to buy tickets at same
pace it did before," Thomas Weisel analyst Jake Fuller said.
Most online travel companies had offered up investors a conservative outlook,
warning that unforeseen events could affect their results. Analysts said the
extent of the air crash's impact on these companies would not be known until
they had a better idea about the nature of the accident.
"We saw the shares down substantially more when people speculated it was
terrorism. When the possibility that it was an accident was mentioned, we saw
the stocks recover somewhat," Dalton said. "If it does prove to be
terrorist-related, the already shaky recover on the air side of the business is
going to be significantly hit."
(C) Reuters Limited.