Last checked at 
(Adds more comments from IAG's CEO, Brussels Airlines flight
cancellations, background, updates shares)
* 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
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 tumbling in recent weeks as the
outbreak has spread around the world, raising fears of a
pandemic that could plunge the global economy into recession.
The crisis is exacerbating deep rooted problems in an
airline industry grappling with overcapacity, environmental
pressures and the grounding of Boeing's top-selling jet.
IAG, which also owns Iberia and Aer Lingus, usually gives an
earnings forecast at this time of year, but said the uncertainty
over the impact and duration of the coronavirus outbreak meant
it could not give accurate 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.
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 moves.
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.
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 virus outbreak.
CASUALTIES
Airline stocks have been among the biggest casualties of a
stock market rout this week as coronavirus fears have gripped
investors.
Shares in European carriers have been hit particularly hard
as the illness spread across the region, with the death toll in
Italy, Europe's worst-hit country, rising to 17 and hundreds of
holidaymakers on Spain's Canary Islands quarantined after four
cases were detected there.
"If we were doing this last Friday, we would have given you
(profit) guidance," IAG's Walsh said on a call with investors,
explaining that at that time the situation in Asia had
stabilised. But since then, the outbreak in Italy has caused "a
big change," making forecasting difficult, he added.
At 1020 GMT, IAG shares were down 7.8% at 475.1 pence, while
easyJet stock was down 3.7% at 1,069.5 pence and Finnair
was off 3.3% at 4.926 euros.
Budget carrier EasyJet reported a "significant" softening of
demand into and out of its bases in northern Italy 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.
Lufthansa subsidiary Brussels Airlines also said on Friday
it would cut its flights to northern Italy by 30% from March 2
to 14 due to the virus outbreak there.
Finnair, meanwhile, warned of a "significant" fall in
operating profit this year due to virus-related disruption.
Finland's national airline 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 in Helsinki and
Josephine Mason in London; Editing by Mark Potter and Carmel
Crimmins)
