Qantas is cutting international capacity by almost a quarter for the next six months following the spread of coronavirus into Europe and North America.
The reductions follow services being trimmed to Asia and come as a result of a “sudden and significant” drop in forward travel demand.
The additional changes will bring the total international capacity reduction for Qantas and low cost offshoot Jetstar from 5 % to 23% with the cuts extended until mid-September.
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The biggest reductions remain focused on Asia down 31%; the US down 19%; the UK down 17% and trans-Tasman to New Zealand down 10% “in line with forward booking trends”.
Qantas is grounding eight Airbus A380 superjumbos in addition to two undergoing scheduled maintenance, leaving just two flying.
The existing London-Singapore-Sydney return service will be temporarily re-routed to become a London-Perth-Sydney service from April 20.
The change is being made in response to strong demand for the non-stop London-Perth route, according to the airline.
Chief executive Alan Joyce, who is forgoing his salary for the remainder of the financial year, said: “In the past fortnight we’ve seen a sharp drop in bookings on our international network as the global coronavirus spread continues.
“We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we’re cutting capacity out to mid-September.
“This improves our ability to reduce costs as well as giving more certainty to the market, customers and our people.
“We retain the flexibility to cut further or to put capacity back in as this situation develops.
“The Qantas Group is a strong business in a challenging environment. We have a robust balance sheet, low debt levels and most of our profit comes from the domestic market. We’re in a good position to ride this out, but we need to take steps to maintain this strength.
“When revenue falls you need to cut costs, and reducing the amount of flying we do is the best way for us to do that.
“Less flying means less work for our people, but we know coronavirus will pass and we want to avoid job losses wherever possible.
“We’re asking our people to use their paid leave and, if they can, consider taking some unpaid leave given we’re flying a lot less.
“Annual management bonuses have been set to zero and the group executive team will take a significant pay cut for the rest of this financial year.”
He added: “It’s hard to predict how long this situation will last, which is why we’re moving now to make sure we remain well positioned. But we know it will pass, and we’ll be well positioned to take advantage of opportunities when it does.”
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