Majority state-owned carrier Finnair issued a profit warning on Friday morning, citing "the fast-developing situation with the coronavirus and its wider than originally estimated impact on the global aviation market".
The flag carrier predicted that its comparable operating result for the first quarter of this year will be lower than that from a year earlier.
Finnair now expects the situation to lead to lower demand and revenue in the second quarter of this year as well.
In early February, Finnair predicted that the direct financial impact of coronavirus during the first quarter would be "relatively limited" even if the cancellations of its flights to and from mainland China continued until the end of the quarter, i.e. late March.
Two weeks ago Finnair cancelled all flights to and from mainland China until 28 March due to the spread of the Covid-19 disease.
"As the coronavirus situation has entered a new phase with outbreaks in several new countries, we will take appropriate measures to adapt our costs, operations and resources to better match our revenues. While the spread of the coronavirus has had a limited impact on our operations so far, we now see a negative impact on demand," Finnair CEO Topi Manner said in a statement.
The airline also withdrew an earlier forecast that its capacity would grow by around four percent this year.
Finnair said it is looking into ways to cut costs by 40-50 million euros, focusing on personnel, sales and marketing activities as well as development initiatives.
The company earlier said it might furlough pilots but now says that personnel measures may affect all personnel, as well as recruitment.
Shares prices slump in Helsinki
Finnair's share price was down by around four percent as the Helsinki Stock Exchange opened on Friday morning.
In the early afternoon it was down by 2.8 percent. The whole OMX index was down by 3.5 percent, with major stocks such as Nokia, Kone, Stora Enso, Nordea and Wärtsilä faring worse than Finnair.
Finnair shares have lost almost a quarter of their value since 11 February amid worries over the virus's impact on the airline's crucial Asian routes.
At least two other European airlines also issued coronavirus-related warnings on Friday, with British Airways owner IAG, like Finnair, warning of a hit to profits and easyJet reporting a big drop in demand into and out of a virus-affected region in Italy. All three carriers announced cost cuts to help weather the storm.