UPDATE 1-KLM airlines to make budget cuts due to coronavirus

KLM, the Dutch arm of Air France KLM, joined Germany's Lufthansa on Wednesday in taking budget cuts in response to a slowdown in business resulting from the coronavirus outbreak.

KLM's cuts will impact non-critical investments such as new IT and real estate projects and advertising, Dutch media reported, citing an internal letter to management. "The impact of the coronavirus is very large and can only be absorbed by budget cuts and a low oil price," Erik Swelheim, KLM's Chief Financial Officer, was quoted as saying in a letter to management.

The staff has been asked to take vacation days to reduce spending, as flight schedules continued to be hurt by reduced air travel. KLM has shut down routes to China until the end of March and parent company Air France KLM warned that costs could run up to 200 million euros ($217.4 million) by April.

KLM could not immediately be reached for comment. Germany's largest airline Lufthansa announced a cost savings program earlier Wednesday, including a suspension of new recruitment, to counter the business impact of the outbreak.