(Bloomberg) -- Spare a thought for Cathay Pacific Airways Ltd.

One of the most high-profile corporate casualties of the pro-democracy protests in Hong Kong, Cathay is also likely to be among the most impacted airlines from the novel coronavirus outbreak now roiling the industry. The company provided a glimpse of the damage Monday, reporting that it and Cathay Dragon carried 3.8% fewer passengers in January than a year earlier. The drop is only likely to deepen as the airline cuts 90% of capacity to China.

“This was the most challenging Chinese New Year period we have experienced,” Cathay’s Chief Customer and Commercial Officer Ronald Lam said in a statement, referring to the national holidays that were at the end of January this year. “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 is particularly exposed to the virus because sales from Hong Kong and China account for about half of its total revenue. The company is bracing for what Chief Executive Officer Augustus Tang said described as a “very significant impact” the virus will have on travel. More than 50 countries and territories have imposed travel restrictions on China and authorities in places such as Taiwan have also denied entry to passengers arriving from Hong Kong, which shares a border with mainland China.

Lam said that the year had started “fairly positively” with “satisfactory” passenger traffic volume through the first three weeks. Then the virus hit. “Our performance deteriorated rapidly in the last week of January as the novel coronavirus situation became more severe, and it continues to weaken significantly.”

Tens of thousands of flights that could have carried millions of passengers in and out of China have been canceled because of the virus, threatening to further strain the finances of an industry that had been reeling from multiple headwinds such as the U.S.-China trade war. According to OAG Aviation Worldwide, the outbreak has cost airlines servicing the region $652 million in lost revenue.

Even before the epidemic, Cathay warned that profit in the second half of last year would be “significantly” lower than the first because it was badly hit by months of protests in Hong Kong. For investors looking forward to a recovery this year, that doesn’t look like happening anytime soon.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Will Davies

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