Air New Zealand cuts flights, profit outlook on coronavirus hit

Air New Zealand has followed Qantas in slashing flights to Asia and across the Tasman as it prepares to take a financial hit of up to $NZ75 million ($72 million) from the coronavirus crisis.

The carrier on Monday said it would cut capacity into Asia by 17 per cent from February through to June, including the suspension of Seoul services from March 7.

Air New Zealand says the coronavirus will cost it up to $NZ75 million. Credit:AP

Air New Zealand had already suspended flights to Shanghai and reduced frequency to Hong Kong, with the COVID-19 outbreak severy denting travel demand in and around Asia and taking a heavy toll on the region's airlines.

Flights between New Zealand and Australia will be reduced by 3 per cent from March through to May, the airline said, while domestic flying will be cut 2 per cent in March and April.

"The airline’s revenue outlook for the remainder of the year is expected to be adversely impacted as a result of softer demand for travel to and from Asian destinations," Air New Zealand said in a statement.

"Weaker forward bookings for travel on the Tasman and domestic networks have also emerged as a result."

Qantas last week cut flights into Asia by 15 per cent, trans-Tasman flights by 6 per cent and domestic flights by 2 per cent in light of the health crisis, which has result in travel bans on non-residents travelling from China.

The financial impact on Qantas would be up to $150 million this year.

Air New Zealand said it would take a hit of $NZ35 million to $NZ75 million, prompting it to downgrade its full-year profit guidance from between $350 million and $450 million, to between $300 million and $350 million.

Air New Zealand's shares are dual listed on the Australian and New Zealand stock exchanges, and is 52 per cent owned by the New Zealand government.

The International Air Transport Association said on Friday that the virus would cause global air travel to fall for the first time in a decade and cost airlines $US29.3 billion in revenue ($44 billion)

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