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* IAG reports weak demand on European, Asian routes
* No earnings guidance yet due to coronavirus uncertainty
* EasyJet says Italy routes hit; Finnair warns on profit
(Adds industry background, details)
By Sarah Young and James Davey
LONDON, Feb 28 (Reuters) - European airlines stepped up
their warnings over the coronavirus outbreak on Friday, with
British Airways-owner IAG and Finnair flagging a hit to profits
and easyJet reporting a big drop in demand into and out of a
virus-affected region in Italy.
All three airlines also joined rivals in announcing cost
cuts to help weather a storm of unknown severity and duration.
A new coronavirus, which emerged late last year in China,
has sent demand for travel plunging in recent weeks as the
outbreak has spread around the world, raising fears of a
pandemic that could plunge the global economy into recession.
IAG, which also owns Iberia and Aer Lingus, usually gives an
earnings forecast at this time of year, but said the ongoing
uncertainty over the impact and duration of the outbreak meant
it could not give accurate profit guidance at this stage.
However, it warned: "We are currently experiencing demand
weakness on Asian and European routes and a weakening of
business travel across our network resulting from the
cancellation of industry events and corporate travel
restrictions."
British Airways has in recent days cancelled flights to and
from Italy, Singapore and South Korea, after it suspended all
direct flights to China in January. IAG said further
cancellations would follow in the coming days.
Lower air traffic growth projections prompted Spanish travel
technology firm Amadeus to forecast slower 2020 core
profit growth on Friday, but it stressed the outlook did not yet
account for the uncertain impact of the coronavirus outbreak.
To deal with the drop in business, IAG said it was cutting
costs, without giving details - joining the likes of Germany's
Lufthansa and Amsterdam-based KLM which have
announced similar plans.
It also said flight cancellations would reduce capacity
growth this year, although CEO Willie Walsh said the group could
start to add capacity if other airlines failed.
Airline stocks have been among the biggest casualties of a
stock market rout this week as coronavirus fears have gripped
investors. At 0845 GMT, IAG shares were down 8% at 474.59 pence,
while easyJet stock was down 3% at 1,075 pence and
Finnair was off 3.4% at 4.922 euros.
DISRUPTION
Budget carrier EasyJet reported a "significant" softening of
demand into and out of its bases in northern Italy - the centre
of the biggest coronavirus outbreak in Europe - and a reduction
across its other European markets.
It also said it would be cancelling some flights,
particularly into and out of Italy, and that it would make cost
savings across its business, without giving details.
"We continue to monitor the situation carefully and will
update the market in due course," it said, adding it was too
early to determine the impact on its results.
Finnair, meanwhile, warned of a "significant" fall in
operating profit this year due to virus-related disruption.
Finland's national airline also said its was scrapping its
2020 capacity growth target, and would look into cutting costs
by 40-50 million euros ($44-54 million), with measures under
consideration including temporary layoffs.
(Additional reporting by Anne Kauranen; Editing by Mark Potter
and Carmel Crimmins)
