Hong Kong (CNN Business) Cathay Pacific (CPCAY) is canceling almost all passenger flights for two months as the novel coronavirus outbreak continues to decimate global demand for travel.

Hong Kong's flagship carrier announced Friday that it would reduce passenger flight capacity by 96% in April and May, saying it would start operating on a "bare skeleton" basis. Cathay Dragon, the company's regional airline, will also cut back by the same proportion.

The decision was made "in light of the severe drop in demand due to the ongoing coronavirus pandemic and multiple government travel restrictions," the company said in a statement Friday.

The reductions were largely expected. Cathay has already significantly shrunk capacity in recent months, cutting flights by 30% in February and 65% in March and April. The latest move extends previously announced cuts, the company said.

Last week, the company also reported brutal financial results for 2019, and warned that a "substantial loss" was projected for the first half of this year and that more flight reductions were likely.

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