Qantas watching coronavirus for impact on international travel downturn

Qantas boss Alan Joyce says the airline is well-placed to withstand any coronavirus-related downturn in international travel.

Qantas CEO Alan Joyce speaks to student pilots at the official opening of the first Qantas Group Pilot Academy in Toowoomba. Picture: Nev Madsen

Qantas boss Alan Joyce expects the airline to withstand any downturn in international travel as a result of the coronavirus outbreak but concedes it is still “early days”.

Speaking in Toowoomba where Mr Joyce joined Queensland Premier Annastacia Palaszczuk for the official opening of the first Qantas Pilot Training Academy, he said the only comparable benchmark was the SARS pandemic in 2003, that cost the airline $55m.

“This is different in a number of different ways and who knows how it’s going to expand but the recovery after SARS was very fast,” said Mr Joyce.

“Qantas is different from back then, our international business is not much different than what it was in 2003 but Qantas has a much bigger domestic business, a loyalty business and much more adaptability and flexibility in moving aircraft around.

“Our oil price has come down quite considerably which has a positive impact but it’s still early stages and we’re keeping an eye on it and watching what we believe could happen and we’ll adapt and change if we have to.”

Since the coronavirus outbreak was confirmed by China last week, Qantas shares have fallen 10 per cent however the share price rebounded slightly on Wednesday to $6.51.

Mr Joyce acknowledged it had been a challenging start to the calendar year, just when things were looking up.

“The bushfires did have an impact. We were getting relatively comfortable in what was happening with the forward bookings, we were seeing a recovery,” he said.

“That was obviously before the coronavirus.”

There were no plans at this stage to pull out of China altogether with Qantas continuing to operate five services a week between Beijing and Sydney and daily flights to Shanghai.

The Beijing services are due to cease in March and Mr Joyce said they could end those early, depending on load factors.

“We’ll continue to review the loads daily, as we normally do,” he said.

“The only thing that’s changed out of China (to date) are the group bookings and that is not material out of the Australian market but we’re keeping a very close eye on it.”

He also indicated the airline would not be signing off on any pay rises for employees in excess of 3 per cent, as negotiations continue with Jetstar pilots.

“What’s happening with the bushfires, what’s happening with coronavirus is a reason why Qantas has to be disciplined,” Mr Joyce said.

“We’re not going to be offering anything above that, we’ve made that clear to the Jetstar pilots, that is not going to change.”

“The reason why, going into a coronavirus, you’d rather be Qantas than any other airline is because of the discipline we’ve had in the business over the last few years and the strength we’ve created on our balance sheet and we’re not going to put that at risk with outrageous pay claims being agreed to with any unions or groups.”

The pilot training academy will train up to 250 pilots a year for the Qantas Group and potentially other airlines.

Built by the Wagner family at their Wellcamp Toowoomba Airport, the $35m facility is expected to eventually cater for as many as 800 students a year.