Cathay Pacific Airways Ltd. cut its earnings outlook after passenger traffic fell for a second month as protests that have put intense pressure on the carrier continued to disrupt travel and business in Hong Kong.

Second-half financial results will be lower than those of the first half, Hong Kong’s flag airline said in a statement Friday, reversing previous forecasts. Cathay also reported a second straight monthly drop in the number of passengers carried and warned of a “significant” decline in inbound bookings for the rest of this year, especially from China and other Asian markets.

“Our expectation is that rest of 2019 will remain incredibly challenging for the airline,” Chief Customer and Commercial Officer Ronald Lam said in the statement. “The mainland China market has been hit especially hard. Intense competition together with an increasing reliance on transit passengers over the short term has continued to apply additional pressure on yield.”

The comments underscore the latest setback for an airline buffeted by the protests in Hong Kong. Chinese regulators clamped down on Cathay after some employees took part in demonstrations, and the company’s decision to subsequently fire staff and warn workers about supporting the pro-democracy movement angered activists. The airline appointed a new chief executive and chairman after their predecessors resigned amid the unrest.

“The status quo for Cathay has changed forever after the protests,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics. “The question now is about their survival. The Chinese will want to send a very clear message.”

Cathay, the world’s worst-performing major airline in the past three months, continued to fall. The stock dropped as much as 2.5% to HK$9.93 in Hong Kong.

Unrest in Hong Kong has led to a slump in visitors, particularly from mainland China, which accounts for the bulk of tourists. They’re especially wary due to a perception they could be targeted in the protests, which state media frame as being driven by violent extremists. Demonstrations spread to the airport at times, crippling operations there and causing hundreds of flight cancellations.

The company said in August that second-half earnings would be better than those of the first six months. But then it reported passenger traffic tumbled 11%, the most in a decade, in August and 7.1% in September.

Cathay filled below 74% of its seats in September, the lowest since 2008, according to data compiled by Bloomberg.

On one flight in mid September bound for Beijing from Hong Kong — once a popular route for the airline — most seats in economy class on Cathay were empty, with passengers able to take up entire rows by themselves.

Perhaps more importantly, some business travelers who typically fly premium seats have been ordered to shun Cathay. State-run companies including China Citic Bank International Ltd., China Huarong International Holdings Ltd. and finance-to-brewing conglomerate China Resources National Corp. banned their employees from booking flights on Cathay, people familiar with the matter have said.

Cathay has frozen headcount and reduced capacity for the winter season due to weaker demand.

(Updates with anecdote in third-to-last paragraph)

–With assistance from John Liu.

©2019 Bloomberg L.P.

This article was written by Kyunghee Park from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: Tail fins of Cathay Pacific Airways Ltd. aircraft are seen at Hong Kong International Airport. Paul Yeung / Bloomberg