Airlines Remain a Tricky Bet

Updated from 12:43 p.m. EDT

Airlines with trans-Atlantic flights saw their shares trade lower Thursday after British authorities said they stopped a massive terror plot whose goal was to blow up a number of planes flying between the U.S. and the U.K.

The move in the stocks pointed up the notorious unreliability of airlines as long-term investments, given their intense cyclicality, historic unprofitability and broad exposure to unpredictable external influences from weather to terrorism.

"Unfortunately, terrorism has become one of the ongoing airline risk factors, along with the business cycle, fuel prices and competition," says S&P analyst Phil Baggaley. "It's part of the environment for U.S. airlines."

Analyst Ray Neidl of Calyon Securities says this of the airlines: "Never invest, but buy and sell."

Still, despite the immediate shock, experts say the impact of the failed terror plan should be limited, assuming, that is, that it doesn't extend further.

Recently, AMR (AMR Quote - Cramer on AMR - Stock Picks) fell 0.4% to $20.21, Continental Airlines (CAL Quote - Cramer on CAL - Stock Picks) was down 1.4% to $23.88, and United Airlines parent UAL (UAUA Quote - Cramer on UAUA - Stock Picks) lost 0.8% to $23.64. All were above their session lows.

The plot targeted flights from Britain to the U.S., particularly those inbound to New York, Washington and California, on those three carriers, according to numerous reports.

However, traders sensed a buying opportunity for the airlines with no routes crossing the Atlantic. Alaska Air (ALK Quote - Cramer on ALK - Stock Picks) rose 4.2% to $36.48, Frontier (FRNT Quote - Cramer on FRNT - Stock Picks) gained 4% to $6.31, and JetBlue(JBLU Quote - Cramer on JBLU - Stock Picks) added 1.6% to $10.31.

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