Airlines cutting flights to China as coronavirus spreads

Airlines are cutting flights to China as the coronavirus spreads.

The mysterious coronavirus spreading around the world poses a "substantial" risk to global air travel and the aerospace sector, an analyst for Canaccord Genuity is warning, and the effects are already being seen in flight cancelations.

However, the long-term financial impact of the outbreak could be less severe.

Ken Herbert, an analyst at financial-services firm Canaccord, said in a research note that although it's "very early into the current coronavirus outbreak," several other outbreaks in recent years provide a framework that can be applied to the current situation. The note mentioned that although the current outbreak appears to be spreading faster than those past viruses, it has been less deadly so far.

He said an average revenue drop of 13% has been observed over past outbreaks, citing data from the International Air Transport Association, an airline trade organization.

"However, we believe that all things considered, traffic tends to recover relatively quickly after a pandemic outbreak," Herbert said.

The brunt of the impact is expected to be borne by Chinese airlines that service Wuhan, the epicenter of the outbreak - particularly those like China Southern, China Eastern, and Air China.

International airlines that fly to the region are likely to see an impact as well. For instance, United Airlines announced on Tuesday that it would cancel 24 flights to and from China in early February, as customer demand has plummeted due to the coronavirus outbreak.

"Due to a significant decline in demand for travel to China, we are suspending some flights between our hub cities and Beijing, Hong Kong and Shanghai beginning February 1 through February 8," a spokesperson for the airline said in a statement. "We will continue to monitor the situation as it develops and will adjust our schedule as needed."