LONDON -- U.K. airports went on an unprecedented level of alert Thursday after police said they had foiled a plot to blow up aircraft in midair between the U.K. and U.S.

Congestion caused by tough new security measures meant many flights to and from the U.K. were canceled and London's Heathrow airport was shut to incoming flights not already in the air, sending airline and airport operator stocks lower.

Read full coverageThe U.K.'s BAA PLC (BAA.LN), a unit of Spain's Grupo Ferrovial SA (FER.MC), requested that all aircraft not already en route to Heathrow not depart for the London airport, due to severe congestion at the airport.

BAA also said its U.K. airports are likely to be extremely busy over the next few days and delays are likely due to additional security measures.

The U.K. government banned all hand luggage from flights leaving the U.K. as part of the unprecedented security. It said it was unclear at this stage how long the measures would stay in place.

Airlines said they are complying with the new security measures. They warned passengers they face long delays due to the new requirements.

The news caused shares of major U.K. airlines to fall early Thursday.

At 1203 GMT, shares of British Airways PLC (BAB) were down 20.5 pence, or 5.26%, at 369.5 pence. Shares in no-frills rivals were also trading lower, with easyJet PLC (EZJ.LN) down 2.2% at 413.5 pence and Ryanair Holdings PLC (RYAAY) down 4.4% at EUR7.25.

Rolls-Royce PLC (RR.LN), which makes engines for aircraft, was also down on the sentiment, with the stock trading 9.5 pence lower, or 2.2%, at 412 pence.

In Spain, Ferrovial shares fell 1.9% to EUR61.1, while rival Abertis Infraestructuras SA (ABE.MC), whose TBI unit runs other U.K. airports, saw its stock fall 1.8% to EUR18.61.

British Airways said it was canceling all short-haul flights out of Heathrow and some short-haul flights out of London's Gatwick airport for the whole of Thursday, due to severe congestion.

The airline said it's aiming to operate as many long-haul services as possible from Heathrow and Gatwick but that these are subject to delay.

An airline official at Heathrow told Dow Jones Newswires separately that flights are likely to face disruption for the next 72 hours or so.

The ongoing flight disruptions and cancellation meant extra demand for Eurostar, the high-speed passenger train service that links London with Belgium and France.

The company said 2,300 extra travelers had already booked its services on Thursday, adding that it will consider extra services if demand increases.

U.S. airline stocks trading on European markets also fell.

In Frankfurt, shares of UAL Corp. (UAUA), which owns United Airlines, were down EUR0.60, or 4.2%, at EUR18.32. Shares of American Airlines' parent company, AMR Corp. (AMR), were down EUR1.08, or 6.5%, at EUR15.56.

American and United, along with British Airways and Virgin Atlantic Ltd., owned by Richard Branson's Virgin Group Ltd. (VGN.YY) and Singapore Airlines Ltd. (S55.SG), are the only airlines allowed to fly from Heathrow airport on routes to the U.S.

A spokesman for United Airlines declined to comment on whether its planes had been targeted as part of the plot.

The ban on hand luggage may also impact some retailers who run tax-free franchises at airports. Retail operations are a major source of income for the airport operators like Ferrovial's BAA and Abertis Infraestructuras SA's (ABE.MC) TBI unit, which runs other U.K. airports. BAA said shops were still open flight-side because goods sold there had already been security cleared.

Shares of WH Smith PLC, (SMWH.LN) a retailer prevalent at U.K. airports, fell 5 pence, or 1.05%, to 475 pence as investors feared tempered sales from the ban on unessential hand luggage.

The news and entertainment retailer has been restricted to selling just food and drinks in some of its 74 airport stores, while on flights to the U.S. passengers aren't even permitted to take drinks on board.

U.K. Home Secretary John Reid said Thursday that the foiled plot aimed to "bring down a number of aircraft through mid-flight explosions, causing a considerable loss of life."

Police have arrested a number of people in London after a major covert counter-terrorist operation lasting several months, police said in a statement.

A report on the BBC Web site said it is thought that the plan was to detonate explosive devices smuggled on aircraft in hand luggage.

The European Commission said it was in close contact with the U.K. government to assess the security situation at Heathrow airport, a spokesman said. As of now, Stefaan De Rynck said he doesn't expect the European Union to take action to tighten security.

Airlines flying between the U.K. and U.S. said they were complying with the new security arrangements and warned passengers traveling in the next few days to expect long delays. In its statement, BAA said passengers flying to the U.S. would be subject to secondary security searches.

"British Airways, acting on instruction from the U.K. government, wishes to advise passengers that no items of hand baggage can be carried on board any aircraft departing any U.K. airport," the airline said in a statement.

Virgin Atlantic said it couldn't comment on whether its planes had been targeted as part of the plot.

Other airlines said they had to cancel flights to the U.K. because of congestion at U.K. airports. Italy's Alitalia SpA (AZA.MI), Scandinavian airline operator SAS AB (SAS.SK), Germany's Deutsche Lufthansa AG (LHA.XE), Air France-KLM (3112.FR) and Spain's Iberia Lineas Aereas de Espana SA (IBLA.MC) were among airlines who said they would canceled some or all flights to the U.K. until later Thursday.

Spanish airports had only operated 80 of 787 flights scheduled to go to the U.K. Thursday as of 1000 GMT, according to airport authority AENA.

The only items allowed through security checks at U.K. airports will be travel documents, pocket wallets and purses, prescribed medicines, spectacles, contact lenses without solution, essentials for babies, and keys.

The unprecedented measures also affected currency trading, with the sterling struggling to hold any gains versus the dollar and down against the euro.

"The pound is being isolated a little because the plot originated here and is seen as having its biggest impact in the U.K.," a London-based dealer said.

Business consultancy Grant Thornton has estimated that Thursday's disruption to travel is likely to cost the U.K. economy at least GBP3.2 million for every hour of delay.

"This figure will rise dramatically due to lost tourism revenue as incoming flights are canceled and as a result of the expected downturn in foreign visitors," analyst Maurice Fitzpatrick said. .

AT A GLANCE: Airlines Shares Down On Hiked Airport Security

THE EVENT: Airline and airport operator stocks fell after unprecedented security measures were introduced at U.K. airports Thursday, following a foiled a plot to blow up aircraft in midair between the U.K. and U.S.

THE KEY ISSUES: Congestion caused by new security measures meant many flights to and from the U.K. were canceled, with London's Heathrow airport shut to incoming short haul flights not already in the air. Long haul flights were operating to and from Heathrow, but with severe delays. Other airports were also severely affected. The U.K. government launched unprecedented security measures at all U.K. airports, including banning all hand luggage from flights leaving the U.K..

WHO's HIT: Airlines around the world, key U.K. airport operators and retailers with shop franchises at U.K. airports. U.S. counterterrorism officials said terrorists targeted United Airlines (UAUA), American Airlines (AMR), and Continental Airlines (CAL) in the plot thwarted by the U.K. Sterling also took a hit, while fears over jet fuel demand also hit oil stocks.

ONGOING DEVELOPMENTS: Airport operator BAA PLC (BAA.LN), a unit of Spain's Grupo Ferrovial SA (FER.MC), requested that all aircraft not en-route to Heathrow shouldn't depart for the London airport, due to severe congestion. Other U.K. airports are likely to be extremely busy over the next few days and delays are likely due to additional security measures.

AIRLINES' REACTION: Airlines said they are complying with the new security measures, warning that passengers they face long delays due to the new requirements. Many had to cancel flights to the U.K. because of congestion at U.K. airports. Italy's Alitalia SpA (AZA.MI), Scandinavian airline operator SAS AB (SAS.SK), Germany's Deutsche Lufthansa AG (LHA.XE), Air France-KLM (3112.FR) and Spain's Iberia Lineas Aereas de Espana SA (IBLA.MC) were among airlines who said they'd canceled some or all flights to the U.K. until later Thursday.

SECURITY DETAILS: The only items allowed through security checks at U.K. airports will be travel documents, pocket wallets and purses, prescribed medicines, spectacles, contact lenses without solution, essentials for babies, and keys. These items can only be carried in transparent plastic bags. U.K. Police said terrorists had planned to explode liquid chemical devices inside hand luggage.

WHAT THEY SAID:

BAA said passengers flying to the U.S. would be subject to secondary security searches. The airport operator also said shops were still open flight-side because goods sold there had already been security cleared.

British Airways PLC (BAB) said all U.K. and European short haul flights to and from Heathrow Airport have been canceled until 1400 GMT Thursday. It also warned of likely long haul cancellations from the airport during the day.

THE ISSUES GOING FORWARD: The impact of the unprecedented security measures is likely to weigh heavily on airlines and airport operators if the current severe disruption, delays and cancellations continue. The U.K. government said it didn't know how long the enhanced security measures would be in place for.

SHARE PRICE REACTION: At 1131 GMT, shares of UAL Corp. (UAUA), which owns United Airlines, were down 3.8% in Frankfurt, while shares of AMR Corp. (AMR), which owns American Airlines, were down 6.5%. British Airways PLC (BAB) was down 3.9% in London, with easyJet PLC (EZJ.LN) off 2.4% and Ryanair Holdings PLC (RYAAY) down 3.8%. In Madrid, Ferrovial was down 1.9%, while Abertis Abertis Infraestructuras SA (ABE.MC), which runs other U.K. airports, was down 1.6%.

---By Elena Berton, Dow Jones Newswires; +44 207 842 9267; [email protected]