accounting for interim reports
break for the airlines. Airlines are now allowed to claim losses from 2001 and 2002 on their taxes over the last five years, a change that could mean $2 billion in cash for the companies .
In addition, the airlines regularly carry "business-interruption" insurance to cover losses due to weather, strikes, or other unforeseen circumstances. It's not clear how much airlines are collecting on claims stemming from the four-day shutdown of U.S. airports in September. The insurance firm Swiss Re, however, estimated in March that September 11-related business-interruption claims will amount to $3.5-$7 billion. Undoubtedly, a large amount will go to the airlines .
The effects of 9/11 attacks continue to harm the industry significantly to this day. The fear of reoccurrence of 9/11 tragedy caused public to avoid the air travel. The trend of decline in demand was steep, and a year later the passenger traffic is still well below 2000 level . The new security checks, random searches and new airline ticket fees caused more individuals take road trips, which again prevent the recovery of the demand. The enactment of new security policies incurred additional cost. Declined passenger demand results combined with the increased cost led the industry to face accumulated net losses.
Downsizing stock prices and airlines
Type Airline 31-Dec-00 31-Dec-01 Price Change % Change
Majors ALK 29.75 29.10 -0.65 -2.2%
LUV 22.35 18.48 -3.87 -17.3%
DAL 50.19 29.26 -20.93 -41.7%
AMR 39.19 22.30 -16.89 -43.1%
NWA 30.13 15.70 -14.43 -47.9%
CAL 51.63 26.21 -25.42 -49.2%
UAL 38.94 13.50 -25.44 -65.3%
AWA 12.81 3.50 -9.31 -72.7%
U 40.56 6.34 -34.22 -84.4%
Airline shares plummeted when the stock markets reopened on September 17. US Airways and America West shares each lost over half their value in just one day. The rest of the airlines [next page]