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Qantas Group forecasts up to £75m coronavirus hit
Qantas Group has cut capacity across its route network after forecasting a A$100 million to A$150 million (£50-£75 million) financial hit from the ongoing coronavirus crisis.
Demand in Asia has been hit after the virus spread across much of China, with cases reported in several neighbouring countries, resulting temporary flight reductions in the region.
Qantas will cut 16% of its Asia capacity through to the end of May following the suspension of its Sydney-Shanghai route, its sole mainland China route.
Its Sydney-Hong Kong service will be halved from 14 flights a week to seven, while its Brisbane-Hong Kong and Melbourne-Hong Kong services will be reduced from seven weekly flights to four and five respectively.
Melbourne-Singapore flights, meanwhile, will be operated by Boeing 787 aircraft instead of larger Airbus A380s, reducing capacity onboard each flight by around 250 seats.
Qantas’s low-cost subsidiary JetStar will cut Asia capacity by 14% until the end of May, affecting its Australia-Japan and Australia-Thailand flights, and intra-Asia flights.
The rest of its international network, including flights to the UK and US, will continue as normal.
The group will also reduce domestic capacity by 2.3% during the second half of the year “to better match demand”.
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Qantas Group chief executive Alan Joyce said the actions would “limit exposure to softening markets”.
“Coronavirus resulted in the suspension of our flights to mainland China, and we’re now seeing some secondary impacts with weaker demand on Hong Kong, Singapore, and to a lesser extent, Japan. Other key routes, like the US and UK, haven’t been impacted.
“What’s important is we have flexibility in how we respond to coronavirus and how we maintain our strategic position more broadly. We can extend how long the cuts are in place, we can deepen them, or we can add seats back in if the demand is there. This is an evolving situation that we’re monitoring closely.
“We know demand into Asia will rebound. And we’ll be ready to ramp back up when it does.”
Joyce added: “These past few months have been extraordinarily difficult for the tourism industry, and we’ve tried to minimise the impact of our capacity reductions as much as possible. About half of Qantas’s domestic cancellations are between Sydney, Melbourne and Brisbane, and we’re avoiding any route exits.”
The group said its capacity cuts were equivalent to grounding 18 aircraft until the end of May, impacting 700 full-time roles.
To avoid job losses, the carrier will use leave balances across its 30,000-strong workforce, freeze recruitment and bring forward planned maintenance.
James Chapple
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