* Australian govt advises against non-essential travel
* Some states tighten travel restrictions
* More information on cuts expected in coming days (Adds Moody's downgrade, Qantas cuts)
SYDNEY, March 23 (Reuters) - Virgin Australia Holdings Ltd VAH.AX said on Monday it expected to make a material reduction in its domestic capacity after the Australian government advised against non-essential domestic travel and some states tightened travel restrictions because of the coronavirus.
Australia's No. 2 airline said more information would be provided in the coming days.
Virgin said last week it would ground all international flights and cut its domestic capacity in half as travel demand plunges due to the coronavirus outbreak. on Friday downgraded Virgin's credit rating to B3 from B2 and placed it on review for further downgrade.
The ratings agency cited a sharp fall in passenger traffic that will result in significant negative free cash flow, a weakening liquidity profile and higher leverage in the financial year ending June 30.
Larger rival Qantas Airways Ltd QAN.AX said last week it would halt all international flights from late March until at least the end of May and put two-thirds of its workforce on leave.