Qantas Airways Ltd and Singapore Airlines Ltd shares dropped as investors worried the weekend bombing on Indonesia's resort island of Bali will deter air travel to the region. Other tourism-related stocks also dropped.
Qantas shares fell 2.5 percent to A$3.58 in Sydney and Singapore Air dropped as much as 3.4 percent to S$9.95 in Singapore. The airlines are two of the biggest carriers serving Bali, where an explosion late Saturday killed at least 184 people and injured hundreds more.
"For Singapore Air, this will have some impact on traffic," said Seah Hiang Hong, head of research at Kim Eng-ong Asia Securities Ltd. "The question now is how big the impact is on tourism in Southeast Asia."
Airlines' shares have slumped in recent months as worries about a possible war with Iraq raised jet fuel prices and added to concerns about air safety. The explosions in Bali, one of Asia's most popular resorts, have already prompted many people to cancel planned holidays, hurting travel companies in the region.
"I don't expect anyone will be going [to Bali] in a hurry," said Albert Hung, who manages A$800 million ($438 million) as head of Australian equities at Tower Asset Management Australia Ltd. "The business Qantas lost will be substantial."
A drop in travel to Southeast Asia would also affect airlines such as Thai Airways International Plc, which had been banking on rising tourism to spur a profit recovery.
In the first six months, 5.33 million people visited Thailand, 6 percent more than for the same period last year, according to the Tourism Authority of Thailand.
"It would affect to the extent Thai Air's load factor to Bali would fall," said Lance Depew, who helps manage US$60 million at Quest Capital Ltd, referring to the number of seats filled with paying passengers. ``In the long term it may benefit as tourists switch to Thailand'' from other places in the region including Bali.
Thai Air shares fell as much as 3.5 percent to 24.6 baht.
Qantas, which dominates the Australian market with a share of about 80 percent, has been trying to expand its flights to Asia, setting up a no-frills carrier based in Cairns, Queensland state.
Bali routes are about 5 percent of total traffic for Qantas, Hung said. Hung said he values Qantas shares at about A$3.50 each after the Bali explosions. Qantas shares closed at a 12-month low of A$3.40 on Oct. 8 and closed at A$3.58 in Sydney.
Shares of Flight Centre Ltd, Australia's largest airline ticket agency, fell 1.4 percent to A$22.54. Shares of Macquarie Airports, the largest shareholder of Sydney Airports Corp, fell 2.3 percent to A$0.85. Sydney airport is Australia's busiest air gateway.
BreakFree Ltd, an Australian tour operator, said its holiday operations to Bali will be affected by the explosions. The drop in revenue from Bali operations will be countered by an anticipated increase in domestic revenue, the company said.
"Bali operations will drop off," said BreakFree Chief Financial Officer Randall Deer in an interview. "But as with other international events like this, Australia is seen domestically and internationally as a safe harbor and tourism goes up."
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