Qantas cuts flights to Asia on weak demand
Jamie Smyth reports from Sydney:
Qantas Airways said on Thursday it would implement 15 per cent capacity cuts in flights to Asia until at least May to mitigate the impact of the coronavirus on its business.
The airline said it expects weaker demand as a result of the virus and travel bans, which would result in a A$100-150m ($67m-100m) hit to earnings before interest and tax in the second half of its 2020 financial year. Customer demand for Australian flights has also begun to weaken prompting Qantas to reduce domestic capacity by about 2 per cent, said Alan Joyce, Qantas chief executive.
“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,” he said.
Other key routes, like the US and UK, haven’t been impacted.
Qantas has accelerated its decision to exit its Beijing route and suspended services to Shanghai until at least May due to the spread of the coronavirus, which has killed more than 2,000 people.
Mr Joyce said Qantas, which reported a 0.5 per cent fall in underlying net profit to A$771m for the six months ended December 31, was in a much stronger position than other carriers to manage the impact of the coronavirus.
“I think what we’re going to see out of this is probably a lot of the weaker airlines either being consolidated or going out of business. I think that’s what usually happens in these situations,” he said.
The capacity cuts within Qantas’ network are the equivalent of grounding 18 aircraft, which affects about 700 roles across the group’s 30,000 workforce. The airline will ask some staff to take paid leave and freeze recruitment to protect jobs.