Swiss, the airline built on the ruins of Switzerland's bankrupt flag carrier Swissair, is cancelling half its order for new planes from Brazilian aircraft maker Embraer.
Andre Dose: can't rule out more job cuts
The original order of 30 aircraft is thought to be worth about 1bn Swiss francs ($722m; £458m).
The company warned investors in a statement that, given the current woes of the travel market, it cannot forecast results for this year.
But it insisted that it would produce a profit in 2004, despite having run up a 980m franc loss in 2002.
More job cuts might be necessary on top of the 700 it has already announced, the firm said.
The International Air Transport Association estimates the war in Iraq alone could add $10bn this year to airline losses worldwide.
Brazil in trouble
The news of the cancelled orders is a bad omen for Embraer, for whom Swiss is the launch customer for its new 170 regional passenger jet.
Swiss will now be taking 15 170 jets instead of 30 from 2004 onwards, with its 2006 order for the large 190 or 195 model also being halved.
Nobody can say what will happen two months from now
Embraer said it now expected to deliver four fewer aircraft in 2003.
"It's a day to day thing," said Embraer's European spokesman about the current aviation industry situation.
"Nobody can say what will happen two months from now."
Embraer has already had the delivery schedule for its biggest client, US carrier ExpressAir, shortened, reducing its estimates for production.
Another big client is AMR Corp, parent of American Airlines which is fighting to avoid following US Airways and United Airlines into bankruptcy.