The impact of coronavirus on travel demand has triggered a profits warning by Cathay Pacific.

The Hong Kong-based carrier revealed that its performance “deteriorated rapidly” in the last week of January as the coronavirus situation became more severe.

Business “continues to weaken significantly” with a “significant cancellation of bookings within a short period of time”.

Capacity has been slashed by 40% across the network for February and March.

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Chief customer and commercial officer Ronald Lam said: “The first half of 2020 was already expected to be extremely challenging financially.

“As a result of this additional significant drop in demand for flights and consequential capacity reduction caused by the novel coronavirus outbreak, the financial results for the first half of 2020 will be significantly down on the same period last year.”

Cathay Pacific and regional arm Cathay Dragon saw total January carryings fall by 3.8% year-on-year to three million passengers, despite long-haul routes showing improved load factors and yield.

Lam said: “This was the most challenging Chinese New Year period we have experienced.

“As the novel coronavirus outbreak in mainland China intensified towards the end of the holiday period, travel demand dropped substantially.

“With more governments worldwide having imposed travel restrictions on passengers from mainland China and in some cases Hong Kong, we are seeing continued cancellations of bookings.

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“We have since taken a series of short-term measures in response. These notably include the sharp reduction of capacity across our global network.

“For February and March, we have now reduced our overall passenger flight capacity by approximately 40%, representing further reduction since our recent announcement.

“Passenger capacity reduction is also likely for April as we continue to monitor and match market demand.”

Inbound passenger traffic to Hong Kong was down 40% last month over January 2019, a slight improvement over the 46% declines seen in November and December.

“For the first time in the past few months we saw growth in our outbound traffic – 1% – though this was largely due to the Chinese New Year holiday starting earlier this year,” Lam said.

“We remain heavily reliant on lower-yield transit traffic through Hong Kong, which grew by 7% versus the same period last year.”

Lam added: “We have an incredible brand with a reputation and track record of premium service and commitment to our customers that differentiates us from our competitors.

“These qualities and values remain at the heart of everything we do and are what will help us come back stronger when we emerge from this current crisis.”