War’s Corporate Toll Is Mounting : Economy: From airlines to car dealers to high-tech outfits, the gulf conflict is affecting business. The fax machine and the phone are in heavy use.

The Persian Gulf War has taken its first corporate casualties, dealing a fatal blow to Eastern Airlines, injuring Trans World Airlines and darkening short-term prospects for auto makers.

New worries that the conflict will go on for months--rather than days or weeks--are adding uncertainty to spending plans by business executives and consumers. Meanwhile, fear of flying, or simply a lack of available flights, is bringing some international business dealings to a halt.

“We’ve actually turned down some deals because we can’t get our documents to our clients,” said Charles H. Nevil, president of a Los Angeles export management company that sells swimming pool equipment and other products in the Middle East. “We’re trying to find out whether the customs officials will accept fax documents.”

Certainly, financial winners have emerged in the first week of fighting too.

Stock prices rallied in the initial days of the war. Shares of some defense contractors, such as Raytheon--which makes the highly regarded Patriot missile--have soared. Suppliers of uniforms and other products used by the military are doing brisk business.

Hard-pressed consumers and energy-intensive firms, including the surviving airlines, stand to benefit if last week’s drop in oil prices is sustained.

By all accounts, a swift victory by the allied coalition would be a welcome tonic to the slumping U.S. economy.

But for the moment, fears of a lengthening, uncertain conflict seem to be placing a burden on key industries and creating new worry for consumers and investors. Reflecting the latest concerns, financial markets retreated Monday, with the Dow Jones industrial average closing down 17.57 points at 2,629.21.

“I would think almost anything that’s consumer-related is being hurt short-run by the war,” said Allen Sinai, chief economist with Boston Co., an investment and forecasting firm.

Consumers aren’t the only ones with war jitters. Fears of terrorism are prompting many business executives to re-evaluate travel plans.

A group of Japanese and U.S. chief executives canceled a February meeting in Laguna Niguel at which they had planned to discuss possible joint ventures and other matters.

“The Japanese businessmen decided they weren’t going to fly internationally, and I suspect some of our businessmen felt the same,” said Barry K. Rogstad, president of the American Business Conference in Washington, a coalition of 100 expanding, mid-sized firms.

He added: “People are using faxes and phones--and canceling meetings.”

That means trouble for the airline industry, pounded for months by a run-up in energy costs sparked by the Middle East crisis and, more recently, by difficulty in getting insurance for flights to the region.

Long-struggling Eastern Airlines shut down last week, in part due to its inability to overcome the higher fuel costs and anxiety about traveling brought on by the war. Trans World Airlines said over the weekend that it was reducing its flight schedule by a third and laying off 3,000 workers due to a nearly 50% drop in transatlantic travel. Among the cuts is a reduction in TWA’s flight schedule between Los Angeles and London.

Pan American World Airways, which serves many of the same destinations as TWA, also is expected to pare back its transatlantic schedule. The cash-starved airline is in bankruptcy proceedings.

American Airlines said Monday that the percentage of seats filled on its transatlantic flights has fallen from the high 50s before the war to the low 30s with the onset of fighting. Others reporting more empty seats on flights across the Atlantic include Delta, down 10%; British Airways, down 5% to 8%; and Iberia SA, down 15% to 20%.

For the struggling airlines, “traditional things--low fares and advertising--won’t work,” said Nicolas Cato, North American vice president at Iberia SA, Spain’s national carrier, which has reduced service to seven European cities, including London and Frankfurt. “The individual is not motivated to travel,” he said. “We just have to sit and wait.”

Car buying--slow for months--appears to have drifted even deeper into the doldrums with the outbreak of fighting.

“Since last Tuesday, we’ve found that there are a large number of people delaying their (auto) purchase decisions, and it’s directly because war has broken out in the Middle East,” said Cynthia Certo, director of forecasting at Integrated Automotive Resources, which monitors car-buying plans.

The number of people who plan to buy a vehicle in the next six months has fallen by 19% since the fighting began, according to the firm’s daily telephone surveys.

The poll takers, who ask about people’s spending plans, got some unexpected responses from agitated consumers in the initial days of war.

“People were saying, ‘How could you even ask such a question?’ ” recalled Thomas F. O’Grady, president of the Philadelphia-area firm, which called off some of its surveying to avoid offending the public.

Anecdotal reports from car dealers give mixed impressions of the war’s effects on the public’s appetite for new cars.

At Toyota of Buena Park, sales manager Steve MacInnes said the war hadn’t had a noticeable impact. “Here in Southern California, people will buy a car come hell or high water,” he declared.

But at Bauer Buick in Chicago, the view was gloomier. In the first three days after war broke out, “it was like a ghost town in here,” said sales manager Mark Wasser. “Saturday, things picked up a little,” he added. “The people I expect to sell cars to now are the ones that have 10-year-old cars that can’t run.”

More broadly, it may be a while before the war’s ultimate consequences for the economy are made clear.

Officials in the high-tech industry cited reluctance to travel as a potential stumbling block to shipping and selling products, but added that it was too early to say how important that effect will be.

For now, increased use of fax machines, electronic mail, teleconferencing and video conferencing have been adequate substitutes for travel, they said.

“It’s an inconvenience, and if it’s just for a short period of time, we can get around it,” said an IBM official. “But if it goes on for a long period, then we’ll have problems.”

Go Corp., a Silicon Valley start-up, is scheduled today to introduce handwriting recognition software, a product at least three years in the making. The unveiling for software publishers and computer manufacturers will go on as planned, company officials said, but they expect fewer participants than originally registered.

And they concede that coverage by the general-interest press will be slight.

But no matter, said Chairman Jerry Kaplan. “We want to reach the technical community with our product, and we’re not being squeezed out of PC Week by the war.”

Times staff writers Denise Gellene and Carla Lazzareschi in Los Angeles and Amy Harmon and Donald Woutat in Detroit contributed to this story.

MOST LIKELY BUSINESS OUTLOOK The latest computer modeling by DRI/McGraw-Hill, a Lexington, Mass., consulting firm, produced this scenario for a U.S. economy at war:

The war stretches out for six months, as a ground offensive proceeds relatively slowly; the final cost is near $75 billion, but resupply is spread out over three years.

Oil prices rebound to $22 per barrel in the second quarter.

Bond yields hold in the 8% to 8.25% range; the Fed continues to loosen credit, lowering the funds rate to 6% by spring.

Consumer confidence recovers gradually as the war progresses.

The economy begins to recover in late spring.

Source: DRI/McGraw