Gary Chase, analyst with Lehman Brothers issued a note this morning on the news out of London. Gary gives us his take on possible effects the news could have on particular airline stocks in the short-term. Chase said in this note, “Some flights have been canceled as a result of these threats, but the larger issue is the threat of demand destruction in the near-term. Below, we review what we believe to be the relevant facts of this situation and offer our quick takeaways.”

“The quick facts:

* In overall exposure to European revenue, Continental is the largest,

followed by Delta, Northwest, and American Airlines

* Of the European exposure, American is most exposed to the UK,

followed by Continental, United, and US Airways

* Most exposed to the UK on a percentage of revenue basis is American Airlines

(6%), followed by Continental (6%), and United” (4%)

Our Takeaways:

* This is obviously an incredibly unfortunate situation with

unpredictable ramifications. However, in the past, these types of

circumstances have created buying opportunities in the group, and that

is our bias for today.

* We believe it entirely plausible that these events will have

some measurable near-term impact on demand, but we are almost through

the peak season for European travel and we do not expect an enduring

impact on demand. Therefore, we do not expect a long-term impact from

these events on airline fundamentals or valuation.”

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