Airline Regional Express has forecast a full-year loss of $15 million due to Victoria's latest coronavirus outbreak.
Also known as Rex, the airline had been on course for earnings to break-even but on Wednesday said it now expected a statutory loss before tax of $15 million.
Rex has cancelled many flights to and from Melbourne over the last fortnight.
Victorians on Wednesday were told restrictions will ease from 11.59pm on Thursday, and Melburnians' two-week strict lockdown will end.
The disruption comes after the airline in March began flying between Brisbane, Sydney and Melbourne as it challenges Qantas, Jetstar and Virgin in domestic travel.
Since May, a number of states and territories have required travellers to isolate for two weeks after arriving from Victoria. This has reduced demand.
Rex said customers whose flights were cancelled due to the virus outbreak were being offered credit refunds.
The carrier was due to start flying between Canberra and Melbourne on Thursday.
The outbreak has delayed the introduction of this route until Friday next week.
Shares reached a record $2.88 in December after the group said it would enter the domestic flights market.
At 1527 AEST, shares were up by 0.8 per cent to $1.26.
The coronavirus has decimated air travel and airlines across the world since the pandemic was declared in March last year.
Qantas boss Alan Joyce in May called for the vaccine rollout to be improved so Australia could open to foreign tourists before the end of the year.
The Qantas group has made thousands of workers redundant in an effort to cut costs.
Meanwhile rival Virgin Australia last year fell into voluntary administration with debts of about $7 billion.
US private equity group Bain Capital has since resurrected the airline.