Terrorism Fears Damage Airline Stocks

Airline industry stock fell Friday amid speculation that TWA Flight 800 was brought down by a terrorist attack.

Airline stocks were down slightly on Thursday and the slide gained momentum on Friday. Investors awoke to banner headlines on the plane’s loss, including one in The New York Times that read: “Investigators Suspect Explosive Device As Likeliest Cause for Crash of Flight 800.”

Although investigators had yet to say what caused the plane to explode Wednesday with 230 people on board, Wall Street was clearly worried that the traveling public would be spooked.

“The entire (airline) group is down and I suspect it’s related in part to the rising belief that the TWA crash was caused by some sort of terrorist activity,” said James M. Higgins, an analyst with Donaldson, Lufkin & Jenrette.

Delta Airlines stock fell $2.12-1/2 a share to $72.75 Friday on the New York Stock Exchange - even after reporting stronger-than-expected quarterly earnings. AMR Corp., parent of American Airlines dropped $3.37-1/2 to $78.75. United Airlines parent UAL Corp. fell $1.75 to $46.

TWA stock also fell further from the $11.25-a-share level before the explosion. It was down 75 cents Friday at $9.50.