There were crumbs of comfort for the beleaguered airline sector, which has collectively lost more than 30 per cent since the terrorist attacks in New York and Washington last week.
Swissair rebounded 6.1 per cent to SFr49.85 on short covering and speculation that the Swiss government could provide financial assistance for the cash-strapped flag carrier if the US gave aid to its battered airlines. KLM staged a rebound, gaining 8.2 per cent to €9.20 on growing optimism that the European Commission would eventually step in with aid for the airlines, in spite of its initial rejection of the idea. The Dutch group, meanwhile, said it was cutting capacity by 5 per cent as soon as it was possible.
Air France picked up 2.1 per cent to €10.60 as the group said it was less vulnerable than US carriers to further disruptions stemming from last week's attacks. Lufthansa dipped 1 per cent to €10.40 as a meeting of the supervisory board late in the day was expected to announce a substantial cut in its profits forecast for the full year, which had been dependent on a upturn in the fourth quarter. Swiss-Swedish industrial group ABB took another beating as analysts lined up to cut their forecasts after management failed to provide fresh earnings guidance in a telephone conference.
Deutsche Bank set the ball rolling by reducing its sum-of-the-parts estimate to SFr10 a share from SFr12. The investment bank pointed to the company's disclosure that the World Trade Centre disaster may cost ABB's reinsurance operation losses in "the mid-double-digit millions" of dollars. Most analysts took that to indicate about $50 million. By the close, ABB was trading 13 per cent down at SFr11.05, taking losses since the start of the year to almost 75 per cent.
Deutsche Bank and other analysts were also disappointed by the company's failure to provide estimates of its exposure to asbestos liability in the US stemming from its 1989 acquisition of Combustion Engineering.
