July 11 (Bloomberg) -- Shannon Airport is losing most of the U.S. soldiers roaming its lounges, along with their souvenir purchases of Guinness memorabilia and rosary beads.

The debt-laden airport is looking for new revenue sources after World Air Holdings Inc., the largest charter operator for the U.S. military, started moving troops to and from Iraq through Leipzig, Germany, rather than Shannon on July 1.

``It's adding to the anxiety in the area about Shannon's future,'' said Brendan Daly, 66, a senator in Ireland's parliament and a resident of County Clare, where the airport is located. ``We just need more bodies, wearing uniforms or not.''

Shannon boomed until the 1960s, as flights from the U.S. stopped at the western edge of Europe to refuel. When longer- range planes made those stops unnecessary, the airport marketed itself as a gateway to Europe for U.S. businesses, drawing companies such as computer network equipment maker Avocent Corp.

To overcome its latest challenge, Shannon proposes to eliminate a fifth of its 500 jobs and reduce landing fees to attract European budget airlines. Compounding the loss of U.S. soldiers is the Irish government's decision to start phasing out agreements with the U.S. that require some trans-Atlantic planes to land there.

``Everything possible needs to be done to maintain the viability of Shannon,'' said Kieran MacSweeney, who is Huntsville, Alabama-based Avocent's head in Ireland and runs the American Chamber of Commerce in the region. ``The airport is crucial for companies and investment.''

U.S. Cluster

Shannon has helped persuade companies to invest in the region because the airport provides easy access to direct flights to the U.S. Ireland's other international airport is in Dublin, 190 kilometers (120 miles) from Limerick, the area's biggest city.

Santa Clara, California-based Intel Corp., the world's biggest maker of semiconductors, employs 160 people in Shannon developing software and researching silicon, which is used in making computer chips. Round Rock, Texas-based Dell Inc., the world's largest computer maker, put its European manufacturing operation in Limerick.

Sixty-nine percent of the 123 companies in the region surveyed by the Irish Business & Employers Confederation in December said Shannon's U.S. links help them stay competitive.

Yet the airport remains about 100 million euros ($128 million) in debt, according to the Dublin Airport Authority, the government-owned company that runs Shannon.

Lifeline From Troops

The soldiers threw a financial lifeline to Shannon. Military landing fees at Shannon, which had a profit of 2.5 million euros last year, generated revenue of 9 million euros.

During the past 18 months, about 500,000 soldiers passed through the airport, where photographs of U.S. presidents hang close to portraits of Irish author James Joyce.

``Shannon was the last stop before they get to the desert, where there's not a lot they can buy, own, see, taste, do, or have,'' James Kenny, the U.S. ambassador in Ireland, said in an interview. ``So whatever they gobbled up in Shannon is what they brought to the Middle East.''

Connemara marble rosary beads were a favorite purchase, airport spokeswoman Claire McEnery said. Yet even with the troops' spending, the airport was on shaky ground.

Right now, half of trans-Atlantic flights between Ireland and the U.S. still must serve Shannon, bringing visitors directly into the region and to hotels such as Drumoland Castle and the Greg Norman-designed Doonbeg Golf Club.

Fewer Flights

Starting in November, just one in three flights will have to land there, and carriers will be free to skip over the airport entirely within two years. Trans-Atlantic passengers at Shannon may drop 30 percent to 500,000, according to a March report by the Irish Business & Employers Confederation.

Houston-based Continental Airlines, which flies between Shannon and New York, plans to serve Shannon ``indefinitely,'' said Nick Britton, a spokesman for the carrier.

Shannon's future has been on the line before, and the airport has found ways to stave off closing.

Ireland started the world's first duty-free store at the airport in 1947. Twelve years later, it opened the Shannon Free Zone next to the airport to boost the area's lagging economy by scrapping export and import duties.

In the 1970s, Shannon persuaded Russian national airline Aeroflot, then the world's largest fleet of commercial aircraft, to make Shannon a stop on its trans-Atlantic routes.

Expediting Immigration

In 1989, the airport opened Europe's first permanent U.S. immigration desk, operated by U.S. authorities. Travelers can pass through checks before boarding their flights, avoiding congestion at airports in New York, Boston and Atlanta.

This time, the airport is looking east as well as to the U.S. Dublin-based Ryanair Holdings Plc, Europe's largest discount carrier, opened a base at Shannon in May 2005, with routes to Italy, France and Spain.

The airport is mitigating the lack of demand for some routes by cutting fees, Ryanair spokesman Peter Sherrard said.

And U.S. passengers aren't giving up on Shannon. AMR Corp.'s American Airlines, the world's largest airline, opened a route between Shannon and Boston in May 2005, while Continental Airlines added an extra daily flight two months ago.

``Shannon has successfully reinvented itself before,'' said Byron Smith, director of the Historical Aviation Society of Ireland. ``It'll do so again.''

To contact the reporter on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net.

Last Updated: July 10, 2006 19:12 EDT