Ten major listed airlines in Europe, comprising almost the entire market value of the European aviation sector, were worth just $15.7 billion on Tuesday, around 12 percent of the market capitalisation of mobile phone giant Vodafone Group Plc .

     Despite its considerable revenues and importance to the world economy, analysts say the global industry is reputed to have destroyed shareholder value throughout its history. Now, after the attacks by hijacked passenger jets in the United States last week, it is facing one of its toughest ever challenges.

     The attacks have frightened passengers away and are expected to result in costly security measures that will diminish the capacity of busy airport terminals.

     As a result, the 10 major European carriers, including Deutsche Lufthansa AG and British Airways Plc , have collectively lost about 30 percent of their value since the attacks.

     But even as equity in the sector almost fades away, history suggests that investors will be back. For some reason, they just find airlines irresistible.

     "People like aeroplanes, particularly men," said ABN Amro analyst Damien Horth. "They like the machines, which go fast. It's a sexy industry."

     Sexy but small, at least in terms of shareholder value.

     DWINDLING CAPITALISATIONS

     The most valuable European airline on Tuesday was Lufthansa. At $3.8 billion, its worth is a little less than that of Heidelberger Druckmaschinen AG , a profitable manufacturer of printing presses which gets rather less investor attention.

     The market capitalisation of British Airways, which is financed largely by debt, rather than equity, was just $2.7 billion on Tuesday, less than the $3.1 billion of Irish no-frills carrier Ryanair Plc .

     Such national icons as Air France SA (valued at $2 billion), Alitalia ($975 million) and KLM Royal Dutch Airlines ($385 million) were worth even less.

     The fall in equity value over the past week was more than 40 percent in the case of Swissair Group , which is now worth just $381 million.

     Asian carriers have been similarly affected, and big falls were also seen on Monday when U.S. carriers resumed trading.

     The market capitalisation of the world's largest airline company, American Airlines owner AMR Corp , fell 39 percent on Monday to a mere $2.7 billion.

     BUYING OPPORTUNITY?

     But while its market value may be modest, the industry's revenues are huge -- $330 billion a year worldwide, according to ABN Amro's Horth.

     The problem is that, even before the attacks, most of these businesses had demonstrated that they could not consistently turn big revenues into big earnings. Operating margins for airlines worldwide are traditionally about three percent -- when things are going right.

     A common reason given for slim margins is the enormous number of competitors, since almost every country, however small, insists on having at least one national airline.

     Moreover, entrepreneurs often find little trouble in starting up new airlines with leased aircraft, and perhaps less trouble in finding willing investors.

     Horth thought that if the crisis forced a round of consolidation -- a big if, he admitted -- then the current prices could be a buying opportunity.

     "There is certainly a potential for value creation in airlines," he said. "It's just that almost no one has ever done it."

-- Additional reporting by Jeff Mason in Frankfurt.