Shares in European airlines fell heavily at the start of business today as news of foiled plans to blow up aircraft in mid-flight rattled markets.
A number of people were arrested in the London area, British police said, and there were severe delays at London's Heathrow airport. Brussels airport cancelled all flights to London, and Lufthansa cancelled all flights to Britain until 1pm Irish time.
BA lost 3.9 per cent to 375 pence by 10:42am. Air France KLM was 3.3 per cent lower at €19.10 and Germany's Lufthansa was off 4.1 per cent at €14.05.
Analysts said news of the plot would have a short-term negative impact on airline stocks but not to expect losses as severe as September 2001 following attacks on the US.
"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.
Europe's biggest budget carrier Ryanair fell 4 per cent to €7.25 in Dublin and easyJet fell 2.4 per cent to 412-1/2p.
Ryanair said flights from London Stansted were suffering three hour delays and it had cancelled its second wave of flights from many of its British and Irish airports.
EasyJet said it expected to cancel some flights out of London airports later today. Lufthansa, Air France KLM, Spain's Iberia and Greece's Olympic Airlines said all flights scheduled for Heathrow had been grounded this morning.
Airlines as far away as Australia were affected. Qantas Airlines said it was limiting carry-on luggage for its flights from Britain and banning liquids on US-bound flights.
Airport operator BAA said it had asked airlines to temporarily halt all in-bound flights from Europe. It had no plans to close Heathrow but warned of severe delays.
Flights continued to operate from Gatwick and Stansted airports near London although some airlines were cancelling flights there, a BAA spokesman said.
The ban on hand luggage included mobile phones and handbags, as well as all liquids except for essential medicines. Milk for babies would be allowed on board but must be tasted by the accompanying passenger, BAA said in a statement.