Coronavirus: Qantas axes flights in wake of travel bans and outbreak

Qantas has revealed it is expecting the coronavirus impact to be almost double that of SARS, which cost it $80m in lost revenue.

Qantas CEO Alan Joyce speaking at the airline’s half year results for the 2020 financial year. Picture: Adam Yip

Qantas has revealed it is expecting the coronavirus impact to be almost double that of SARS, with the airline slashing flights as it braces for a $150m blow to its bottom line.

Up to 700 full-time roles will be affected with the equivalent of 18 aircraft grounded but chief executive Alan Joyce said job cuts would be avoided, with employees able to take paid leave instead.

One in six flights to Asia had been cut or downsized and services to New Zealand and within Australia pared back until at least the end of May.

The financial impact to Qantas was expected to be in the vicinity of $100m to $150m for the 2020 financial year. During the SARS outbreak in 2003, Qantas lost $50m, or $80m in today’s terms.

Federal Tourism Minister Simon Birmingham said the reduction in flights by Qantas was disappointing but understandable given the impact of the coronavirus on global travel demand.

“During this period, I urge Australians to continue to travel within Australia,” he said.

Mr Joyce said there was scope to extend capacity cuts further depending on the duration of the epidemic and related travel restrictions.

He said Qantas was well positioned to withstand a major downturn after posting a $648m before-tax profit for the first half of the 2020 financial year.

“I think what we’re going to see out of this is a lot of the weaker airlines either being consolidated or going out of business,” Mr Joyce said.

“That’s what usually happens in these situations. That’s why we’re so optimistic to be Qantas because of the strength we’ve built up over the years.”

Virgin Australia will deliver its half-year results on Wednesday, with another loss expected from the troubled carrier.

Adding to its woes was the reported takeover of major shareholder HNA Group by China, with the intention of selling off its airline assets.

A Virgin Australia spokesman declined to comment on the takeover, which could have a major bearing on the airline’s ownership at a time when its shares are trading at 13c.

Sydney Airport chief executive Geoff Culbert, who reported a downturn in passengers for the first month of the year, said it was “really important to have two viable airlines competing against each other in the domestic market”.

“That’s good for passengers and that’s certainly how we view it,” Mr Culbert said.

Both he and Mr Joyce were of the belief that once the coronavirus outbreak was contained and travel restrictions were relaxed, demand would return quickly and in even greater numbers.