Air New Zealand shares fell to their lowest level since mid 2009 as faltering global economic growth reduced demand for travel and cut into airline margins.
The stock fell as low as 91 cents on Monday, bringing its decline this year to 39 per cent, having traded at $1.53 in January.
The stock price weakness is in step with regional rivals - Qantas Airways has fallen 37 per cent and Singapore Airlines is down 34 per cent.
"It's a tough environment for all airlines - it is a very hard industry to turn off the cost tap," said Craig Brown, senior investment analyst at One Path New Zealand.
"Airlines themselves are a volatile business, people either love them or hate them."
Air New Zealand's forward bookings have been hurt by economic uncertainty in a number of markets, rising fuel costs and a slow recovery in the Japanese market following March's earthquake and tsunami, according to an investor presentation last month.
The airline posted a loss of $37 million in its second half ended June 30, when flights were disrupted by earthquakes in Canterbury and Japan, leading to unprofitable "compassionate' fares for Christchurch residents.
The profit outlook has dimmed for airlines worldwide.
The International Air Transport Association (IATA) last month cut its forecast for airline profits in 2012 to $3.5 billion from $4.9 billion and said their net margin would shrink to 0.6 per cent from the 1.2 per cent it expects for 2011.
The IATA said the Euro zone's debt crisis "puts severe downside risk on the 2012 outlook".
Should the region's woes result is recession and another blow-out for banks, the global aviation industry could suffer losses exceeding $8 billion in 2012, IATA said in a report posted on its website.
NZN