Qantas to cut international capacity by a quarter as it grapples with coronavirus
Qantas will slash its international capacity by nearly 25 per cent for the next six months, as it grapples with a steep fall in demand due to coronavirus.
Qantas’ chief executive Alan Joyce will not take his salary until the end of the financial year, which ends 30 June. The board will take a 30 per cent reduction in fees, while the group’s executive management will take a 30 per cent pay cut.
All Qantas and Jetstar employees have been asked to take paid or unpaid leave in light of reduced flying activity.
The airline said it would ground most of its Airbus SE A380s. It will now ground the equivalent of 38 planes, up from the 18 announced last month.
It brings the total international capacity reduction for Qantas and Jetstar from five per cent to 23 per cent versus the same time last year.
The biggest reductions remain focussed on Asia, now down 31 per cent compared with the same period last year.
In a statement Qantas said, “Rather than exit routes altogether, Qantas will use smaller aircraft and reduce the frequency of flights to maintain overall connectivity.”
Qantas will also cancel the off-market buyback announced in February, which will preserve $150m in cash, due to the impact of the coronavirus outbreak on its financial performance.
Joyce said: “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.”
“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.”