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Qantas Announces Measures to Reduce Impact of Coronavirus
Australian flag carrier Qantas has announced what actions it will take to mitigate the business impact due to the COVID-19 Coronavirus and the subsequent global drop in demand in travel bookings.
The airline group will see cuts to its international flying program with a reduction in capacity by around 25 percent for the next six months. Among the reductions, the biggest focus is on Asian flights, which has dropped 31 percent compared to a year ago. Capacity to the United States has fallen 19 percent, the United Kingdom down by 17 percent and Trans-Tasman routes down 10 percent.
The airline said it will make changes to the type of aircraft being utilized on certain routes, with smaller aircraft being operated as well as a reduction in frequencies on certain routes. The most obvious casualty of this decision is the 12 Airbus A380s within the Qantas fleet.
Regarding the A380 decision, the airline stated: “This approach results in eight of the airline’s largest aircraft, the Airbus A380, grounded until mid-September. A further two A380s are undergoing scheduled heavy maintenance and cabin upgrades, leaving two of its A380s flying.”
Qantas’ decision to ground the majority of its double-decker fleet follows the decision by German flag carrier Lufthansa to ground all 14 A380s until at least May after the airline reported a 35 percent load factor on flights operated by the aircraft.
In the announcement, the airline also reported the new Brisbane-Chicago route which was due to begin in May will be delayed until mid-September.
But the measures are also being taken at the top of the group too. The Group CEO will take no salary, Qantas Chairman will take no fees, a 30 percent reduction in payments to the Qantas Board members, as well as a 30 percent pay cut by the Group Executive Management for the 2020 financial year. All non-essential recruitment will be frozen, and all Qantas and Jetstar employees will be encouraged to take paid or unpaid leave in light of the reduction in flights.
Qantas Group CEO Alan Joyce, 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,” he continued in a statement.
“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,” the CEO summarized.
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