Terrorism scare shaves Air NZ price

Air New Zealand shares have dropped to a new post-share-split low following the latest international terrorism scare.

The shares closed at $1.08 yesterday, down 3c.

Analysts said airlines and travel companies had been dealt a sharp blow by the discovery of a terrorist plot to blow up airliners on the transatlantic run. Peter Sigley, of GoldmanSachs JB Were, said it was another setback for international travel at a time when conditions were already difficult.

"Quite often after these events, we see a lot of countries turn inward in terms of travel patterns - particularly when you add all the various restrictions that look like being brought into place," he said.

Sigley said the incident had the potential to tip a flat environment into a negative one.

Air NZ's strategy of focusing its global efforts through Hong Kong and North Asia would be a positive in the present circumstances.

An Air NZ spokesperson said there had been no cancellations and, other than some delays and additional security procedures, there was no direct impact on the business.

Travel agent House of Travel remained optimistic yesterday.

Retail director Brent Thomas said he was confident the terror alert would not dampen the Kiwi traveller's spirit.

"Terrorism is sadly very much part of the world we live in. Since the September 11 attacks, people are now more resilient to the inherent risks of travelling.

"New Zealanders are resilient and, consequently, we are not expecting a sudden rush of cancellations."

Shares in leading international carriers fell initially as flights were cancelled in and out of Britain.

Analysts in Britain said the immediate impact would come from the cost of cancelled flights but that all airlines would be affected in the longer term by higher security costs.

Experts said tourism would feel an immediate impact but the longer-term effects for the economy as a whole were likely to be less harsh.

- additional reporting by agencies