Last checked at 
* SAS says virus outbreak affecting demand
* Says will cut short-haul capacity
* To cut costs, measures could include temporary layoffs
* Analyst: risks "large 3-digit mln" SEK profit hit
*
(Adds company and analyst comment, detail, shares)
STOCKHOLM, March 3 (Reuters) - Scandinavian airline SAS
said on Tuesday it was cutting capacity and withdrawing
its financial guidance for the current financial year after the
spread of the coronavirus hit demand.
SAS shares have tumbled 35% so far this year as the virus
that began in China has spread to dozens of countries across the
world, curbing airline travel and savaging stocks in the sector.
"In response to the lower demand, SAS will in the next
couple of months seek to reduce part of its short haul network
capacity," the airline said in a statement, adding it would also
cut flights to Hong Kong and continue to suspend services to
mainland China.
"At this stage, it is too early to assess the full impact on
SAS operations and financial outcome and therefore not possible
to give a more accurate guidance."
A spokeswoman at SAS, which has been focusing increasingly
on leisure travel in Europe in recent years, said the company
had seen a big drop in demand over the past few days, not the
least to and from the north of Italy, Europe's worst-affected
country.
She said the new capacity reductions concerned March and
April while there were no decisions made for the important
summer holiday season given the uncertain demand outlook.
She declined to elaborate on demand and departures.
Only last week SAS stood by its full-year outlook for an
operating margin excluding one-off items of 3-5%, but cautioned
things could change if the coronavirus outbreak were to spread
and extend to summer.
Since then there have been more cases of the virus in
Europe, SAS's main market, and rivals such as Finnair
, Easyjet and British Airways owner IAG
have warned of the impact on their business.
SAS, part-owned by the governments of Sweden and Denmark,
said it was pursuing a number of measures to cut costs,
including postponement of marketing and a hiring freeze, while
it was also looking to reduce spending on personnel.
"Measures related to personnel expenses may include
temporary layoffs, voluntary leave, early retirement or other
initiatives," SAS said.
Sydbank analyst Jacob Pedersen said the hit to full-year
profit from the coronavirus outbreak could be in the "large
three-digit million" crowns.
"But it is very difficult to asses, it all depends on how
quickly the situation normalizes. I think SAS doing what in can,
its the right measures," he added.
SAS' shares were down 1% at 1248 GMT while the wider market
in Stockholm was up 1.8%.
Rival Norwegian Air in neighbouring Norway said on Thursday
it was flying as normal while monitoring developments around the
coronavirus outbreak closely.
(Reporting by Niklas Pollard and Anna Ringstrom; additional
reporting by Tommy Lund in Gdansk; editing by Susan Fenton and
Emelia Sithole-Matarise)
