Terrorist attacks in Madrid spelled bad news for the airline industry, especially for America's big carriers that have seen a gradual pick-up of business on their normally lucrative transatlantic routes. Indeed, prior to the latest attacks, the industry's outlook had seemed beguilingly upbeat In the coming months there will be plenty of news about airlines recovering: this week, for instance, Virgin Atlantic unveiled big expansion plans. Financial markets have been anticipating this bounty. Already this year the share price of American Airlines' parent company, AMR, at one point had climbed by one-third, while that of British Airways (BA) rose by over a third as its profits recovered faster than predicted, up by ￡100m ($170m) in its third quarter to ￡125m. Analysts are forecasting that BA will finish the year to the end of March with profits of around ￡600m, close to the record level of 1996. Last year the share prices of the big American network carriers jumped by 61% (admittedly from the sub-basement), as in-vestors scented recovery (airline share prices have since retreated on concerns about terrorism and the oil price, though by much less than their previous gains-see chart on next page).
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