LONDON, Aug 10: Airlines cancelled hundreds of flights in and out of London on Thursday after a foiled bomb threat sparked a security alert, throwing UK airports into chaos and pummelling airline stocks.

Airlines banned hand luggage on flights out of the United Kingdom and warned of severe delays at London airports after British police said they had foiled a plot to blow up aircraft mid-flight between Britain and the United States.

Carriers on both sides of the Atlantic suspended flights, waiving penalties for ticket changes and extra checked baggage.

British Airways and easyJet said they were cancelling some short-haul flights in and out of the capital, while planes bound from Europe into Heathrow Airport were temporarily grounded.

US airlines also cancelled some flights. American Airlines, a unit of AMR Corp., said it had cancelled six flights between Heathrow and the United States, while UAL Corp.’s United Airlines said it was expecting delays.

Shares in Europe’s three biggest airlines fell. BA lost 5.1 per cent to close at 370-1/4 pence. Air France KLM was 3.0 per cent lower at 19.15 euros, and Germany's Lufthansa was off 3.3 per cent at 14.17 euros.

Declines were less for US airlines. Continental Airlines fell 1.4 per cent to $23.88 by 1558 GMT and AMR eased 0.8 per cent to $20.13.

Analysts said news of the plot would have a short-term negative impact on airline stocks but they did not expect losses as severe as following the September 2001 attacks on the United States.

“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.

BA cancelled all domestic and European flights in and out of Heathrow and some at Gatwick airport on Thursday but said it would try to operate as many long-haul flights as possible.

Exane BNP Paribas analysts said the financial impact on BA could be the same as the 35 million pounds to 40 million pounds the airline lost last year when baggage handlers at Heathrow went on strike.

EasyJet cancelled about 300 flights in and out of Gatwick, Stansted and Luton airports near London. Ryanair reported flight delays of up to six hours.

European carriers including Lufthansa, Air France KLM, Spain’s Iberia, Greece's Olympic Airlines and Alitalia said all flights scheduled for Heathrow had been temporarily grounded.—Reuters