Aircraft parked at stands at Terminal Five of Heathrow Airport in London yesterday. British police said yesterday they had thwarted a plot to blow up aircraft in mid-flight between Britain and the United States and arrested more than 20 people. - Reuters

Airlines cancelled hundreds of flights in and out of London yesterday after a foiled bomb threat sparked a security alert, throwing U.K. airports into chaos and pummelling airline stocks.

Here in Kingston, Air Jamaica announced it's flights were unaffected by the developments, while elsewhere in the region, in Puerto Rico, security levels were raised, but with few indications of disruptions.

Analysts immediately predicted higher costs for airlines, saying they are likely to be hit by new security costs, reminiscent of the stipulations by the U.S. in the wake of the September 11, 2001 terror attacks on its soil.

HAND LUGGAGE BANNED

Airlines banned hand luggage on flights out of the United Kingdom and warned of severe delays at London airports after British police said they had foiled a plot to blow up aircraft mid-flight between Britain and the United States.

Thousands of passengers were stranded after British Airways and EasyJet said they were cancelling all short-haul flights in and out of the capital, while planes bound from Europe into Heathrow Airport were temporarily grounded.

Passengers were told to stay away from the airport because of severe delays caused by heightened security checks.

Airlines reported heavy traffic congestion on roads into Heathrow.

Shares in Europe's three biggest airlines fell. BA lost 5.5 per cent to 368-1/2 pence by 1238 GMT. Air France KLM was 4.8 per cent lower at 18.80 euros and Germany's Lufthansa was off 4.6 percent at 13.98 euros.

Analysts said news of the plot would have a short-term negative impact on airline stocks but they did not expect losses as severe as September 2001.

MORE SENSITIVE

"BA looks more sensitive than the two low-fare carriers, due to its higher profile name and route network across the North Atlantic. The airlines, however, are in much better shape than they were in 2001," Panmure analyst Gert Zonneveld said in a client note.

BA cancelled all domestic and European flights in and out of Heathrow and Gatwick airports on Thursday but said it would try to operate as many long-haul flights as possible.

Heathrow handles about 180,000 passengers a day in the peak summer period.

Lufthansa said 36 flights to Heathrow with about 5,000 passengers had been cancelled until 1800 GMT.

- Reuters and Gleaner report

Taken from the Financial Gleaner Friday, August 11, 2006.