Airline Stocks Surge After Reagan National Airport Announcement

Airline stocks, led by US Airways Group surged on Tuesday after President Bush announced that Reagan National Airport, closed since the Sept. 11 terrorist attacks, would reopen Thursday.

Shares of US Airways Group climbed more than 16 percent and other airline shares climbed, continuing a sector rally that began on Monday. The American Stock Exchange airline index rose 4.7 percent to 71.86. Also rising sharply was Continental Airlines, up 10 percent to $17.36.

"Most of the airlines are up and the opening of National Airport probably contributed to US Airways,'' said Ray Neidl, an ABN AMRO airline analyst.

"There really is no greater symbol that America's back in business than the reopening of this airport," Bush said Tuesday from the terminal of the airport, which sits close to the White House and other national landmarks.

The airport is to reopen Thursday with shuttle flights to New York's LaGuardia Airport and Boston. After the shuttle flights begin, service will resume between National Airport and Atlanta. Flights also will resume to and from Chicago, Dallas, Minneapolis, Newark and Pittsburgh, Raymond said.

Arlington, Virginia-based US Airways stock gained as much as 77 cents to $5.25 during midday trading after Bush's announcement.

Shares of America West Holdings climbed 23 cents, or 11.6 percent, to $2.21 while Continental Airlines gained $1.58, or 10.0 percent, to $17.35 on the New York Stock Exchange.

Under the new rules at Reagan National , additional cities will be added to service after a month of the limited service. At that time, the airport will be operating at 57 percent of its pre-Sept. 11 service.

Planes can only fly in and out of the airport from 7 a.m. to 10 p.m., and the Boeing 737 will be the largest plane allowed.

Restrictions on air traffic will include a temporary prohibition against flight patterns that follow the Potomac River near the White House, Capitol, Pentagon and CIA.

All passengers will have to go through two security checkpoints, show identification twice, and be limited to one carry-on bag. There also will be expanded identification checks for airport employees and flight crews, and expanded police and K-9 patrols. Air marshals will be on board all flights.

Growing Financial Difficulties

Despite encouraging signs, however, many carriers worldwide are facing growing difficulties and even bankruptcy. Cuts were expected from Taiwanese, Spanish and Austrian carriers, while the cash-strapped Swissair Group suspended all its flights a day after banks mounted a rescue plan for its airline but left its other businesses in financial crisis.

Switzerland's Swissair shut down flight operations Tuesday after its schedule was thrown into turmoil by creditors moving against the financially troubled airline. The company said in a statement it was forced to halt flights because it had been unable to scrape together enough cash to keep operations going. It gave no indication how long it would be before it could resume flying.

Earlier Tuesday, two Swissair planes were blocked by authorities at London's Heathrow Airport pending payment of fees, and flights to most other European destinations were canceled or delayed.

Taiwanese carrier EVA Airways Corp. said it would withdraw 17 weekly flights to the United States and southeast Asia, while Austrian Airlines abandoned its Miami service and said it could not rule out staff cuts. 

Spain's Iberia Lineas Aereas de Espana SA had told employees it would cut 10 percent of its flights and may implement similar staff reductions, a newspaper reported. 

U.S. airlines have typically slashed schedules by 20 percent and announced layoffs exceeding 100,000.

Air Travel Picks Up a Bit

Meanwhile, the Air Transport Association, a trade group for the major airlines, said that while air travel still is well below levels prior to the terrorist attacks, many more passengers flew on domestic flights this week compared to the previous week. 

Preliminary estimates showed 665,714 passengers flew on domestic flights last Thursday, compared to 518,765 the Thursday before. The flights were 46 percent full, up from 39 percent a week earlier.

A year ago, airplanes carried around 1 million passengers a day and were around 70 percent full. There were no numbers on weekend flights, but airport and airline officials said it appeared more people were flying.

Airline passengers are seeing greater security at airports and being encouraged to arrive two hours before departures. The National Guard has personnel patrolling major airports and more strenuous checks of passengers and baggage are being conducted everywhere.

But at least three airports — Dulles outside Washington, Houston's Bush Intercontinental and O'Hare in Chicago — are allowing passengers of certain airlines to check their baggage at the curbs, albeit under stricter security procedures.

Curbside check-in was banned when airports reopened following the attacks. Federal Aviation Administration spokesman William Shumann said the FAA now is approving requests from individual airlines and airports to allow curbside check-in if the tighter security measures are followed. He declined to identify the measures, citing security needs.

Reuters and the Associated Press contributed to this report.