Deutsche Lufthansa (DLAK.Y 1.70%) intends to cut its capacity by up to 50% in the coming weeks, one of the most dramatic signs yet of the impact the COVID-19 coronavirus is having on travel demand.

The German airline in a statement said it "has been exposed to drastic declines in bookings and numerous flight cancellations due to the spread of the COVID-19 virus," saying all regions are now affected. The cuts, which will impact up to half of its global schedule, are designed to "reduce the financial consequences of the slump in demand."

An traveler wearing a mask while sitting on a plane

Image source: Getty Images.

Airline stocks have been among the sectors most affected by the novel coronavirus, with some U.S. carriers now down more than 40% year to date. A number of U.S. carriers have suspended service to China and other areas hard-hit by the outbreak, and United Airlines Holdings on Wednesday said it would cut international flying by 20% and domestic flights by 10%. But none to date have taken any action as severe as what Lufthansa is doing.

Lufthansa had already cut flights to China and had been warning it could take more drastic actions if demand did not quickly recover.

The airline's moves are fresh evidence that the coronavirus will impact operations, and financial results, well past the current quarter, and could depress travel through at least the peak summer season.

On Thursday the International Air Transport Association estimated the coronavirus could cost airlines about $113 billion in lost 2020 revenue worldwide, well above the $29 billion estimate it had forecast just weeks ago.