Advertisment

American Air crash may slow online travel rebound

author-image
CIOL Bureau
New Update

Reshma Kapadia

Advertisment

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.

Advertisment

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.

Advertisment

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.

tech-news