Coronavirus: Qantas slashes more flights, grounds more than half of A380 fleet

Qantas has been forced to make further drastic flight cuts, but route revisions are not the only thing to go amid the coronavirus outbreak.

Following flight cuts to Japan, Hong Kong and even New Zealand on Friday, Australian airline Qantas has been forced to take even more action amid the coronavirus COVID-19 outbreak.

On Tuesday, the airline announced it was altering routes to London and parking 10 of their 12 A380 aircraft because of weak demand — saying it will reduce capacity of their international network by a quarter, and domestic routes by 5 per cent for the next six months.

Qantas Group said rather than exit routes altogether, the airline would use smaller aircraft and reduce the frequency of flights to maintain overall connectivity.

“We’ve seen North America and Europe have a big hit in forward bookings,” Qantas Group CEO Alan Joyce said at a press conference on Tuesday.

Qantas CFO Vanessa Hudson and Qantas CEO Alan Joyce announced changes to their flight network amid the coronavirus outbreak. Picture: Adam Yip

“We’re grounding around 38 aircraft in total. In addition to that, we will be trying to avoid redundancies as best we can.

“We are in this situation, with this schedule, having over 2,000 people that are surplus to that schedule, and we will be managing that reduction through asking people to take paid leave and unpaid leave.”

Mr Joyce said in addition to leave, they will be asking management to take “take a cut”.

“I’ll be taking no salary for the rest of this financial year, and our senior leadership team will be taking a 30% drop in salary,” Mr Joyce said.

“We’ll be trying to pull every lever that we can to make sure that the group gets through this environment.”

Qantas CEO Alan Joyce said he will not receive a salary for the rest of the financial year. Picture: Adam Yip

Mr Joyce said the airline forecasts the change in schedule to extend in to September, with the biggest change impacting Sydneysiders heading to London. From April 20, instead of flying through Singapore and on to London, flights will be temporarily re-routed to become a Sydney-Perth-London service. Mr Joyce said they will be working with partner airlines like British Airways to account for passengers who still want to fly via Singapore.

The much-anticipated Brisbane to Chicago route will now be delayed from mid-April to mid-September. The airline’s route from Brisbane and Melbourne to San Francisco has also been suspended.

“We’re taking a hit. Every airline in the world is,” Mr Joyce said.

“The IATA (International Air Transport Association), the industry body, has said this is going to cost up to $113 million US in revenue for the entire industry. Last year, the industry made less than $30 billion, so this is quite significant for the entire industry.”

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Qantas will park eight of their A380s until September.

“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

“We retain the flexibility to cut further or to put capacity back in as this situation develops.

“The Qantas Group is a strong business in a challenging environment. We have a robust balance sheet, low debt levels and most of our profit comes from the domestic market. We’re in a good position to ride this out, but we need to take steps to maintain this strength.

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Budget airline Jetstar, which suspended its route from the Gold Coast to Seoul in South Korea amid weakening demand last week, will also make further cuts to the airline’s network.

The airline will cut capacity by almost 40 per cent with reductions in frequencies across the network. Singapore to Taipei and Osaka routes will be suspended entirely.

Jetstar Japan has suspended its international services to Hong Kong, Taipei and Shanghai until at least the end of May and will reduce flights to Manila.

Jetstar Pacific (based in Vietnam) has also suspended all international routes to the end of April with the exception of Ho Chi Minh-Bangkok where flights have been halved.