Qantas cuts flights as COVID-19 eats into profits

Qantas cuts flights as COVID-19 eats into profits


Qantas retains the ability to “go a lot deeper” with flight cuts, Mr Joyce said, as he sounded an ominous warning for the aviation sector in the face of the ongoing health crisis.

“We know we can ride this out. Not all airlines in the world will,” he said.

Just two A380s will remain in the air.

Just two A380s will remain in the air.Credit:Brendon Thorne

“I think this will be survival of the fittest, and I think Qantas is one of the fittest and [most] dynamic airlines in the world.”

The changes mean just two of the airline’s fleet of 12 Airbus A380 jumbo planes will remain flying. The Sydney-London route will not stopover in Singapore after April 20, with the flight instead re-routed through Perth.

The launch of the Brisbane-Chicago route has been shelved until September, while Jetstar will suspend flights to Bangkok and cut flights to Japan and Vietnam by almost half.

We know we can ride this out. Not all airlines in the world will.

Qantas chief Alan Joyce

Compared to the same time last year, the reductions represent a 31 per cent cut to Asian services, while the US (19 per cent) and the UK (17 per cent) are also affected as travel demand collapses amid the uncontained spread of the virus into Europe and the US.

The cuts were foreshadowed by The Sydney Morning Herald and The Age with the airline scrambling to respond to rapidly changing demand as tourism and business travel dries up.

Mr Joyce said the flight cuts meant the company now had 2000 extra staff than required.

“We’re using every lever we can to avoid redundancies. We think we can do that until September with these levels of cuts,” he told a media call on Tuesday morning.

Mr Joyce will not receive a salary for the remainder of the financial year while management will take a 30 per cent pay cut. To avoid redundancies and job losses, the airline is asking all Qantas and Jetstar employees to take paid and unpaid leave.

Qantas and Jetstar passengers will be notified this week if they are affected. The airlines will also waive change fees for new international bookings made until the end of March.

Mr Joyce said the present crisis was not the worst of his career, citing the near-disaster in 2010 when an engine explosion aboard QF32 caused an emergency landing of a Sydney-bound A380.

“That was probably the biggest thing I’ve ever gone through because people’s lives were at stake,” he said. “Everything always pales into significance compared to that.”

Three weeks ago, Qantas cut capacity across both international and domestic networks equivalent to grounding 18 aircraft until the end of May. The airline also estimated the virus would slash up to $150 million from its profit this year, nearly twice the impact of the SARS outbreak in 2003.

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Then last week the airline announced further cuts, with cuts to services to Japan, Hong Kong and Auckland.

The airline’s share price has been decimated in recent weeks due to the coronavirus. Qantas opened 2.4 per cent lower at $4.08 on Tuesday morning.

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