Coronavirus Set To Cost Qantas $150 Million
Iconic Australian airline Qantas has announced it will slash flights across Asia as the coronavirus outbreak continues to damage airlines globally.
The airline revealed an expected cost of between $100 million and $150 million out of its yearly revenue resulting from the outbreak crisis and reduced travel plans. But Qantas also said the impact will be lessened by cheaper fuel prices – also being caused from the outbreak’s economic disruption.
Qantas will reduce its overall group capacity to Asia by 15 per cent until the end of May at least – with Qantas International capacity being slashed by 16 per cent alongside Jetstar, also reducing seats to the region by 14 per cent.
The lucrative flight between Sydney and Hong Kong will be halved from 14 flights per week to seven and flights between Sydney and Shanghai will remain suspended.
Qantas chief executive Alan Joyce said the company is seeing secondary impacts from the coronavirus and weaker demands to Asian regions, according to ABC News.
‘Coronavirus resulted in the suspension of flights to mainland China and we’re now seeing some secondary impacts and weaker demand on Hong Kong, Singapore and to a lesser extent Japan,’ he said.
Domestic flights are also set to be reduced, with Qantas flights between Melbourne and Brisbane being pulled back as well as international Jetstar flights reduced to Thailand and Japan including intra-Asia flights.
Qantas and Jetstar flights from Australia to New Zealand will also be pulled back by 5 per cent, with the group admitting to reducing 2.3 per cent of domestic capacity in the second half of the year to better reflect demand.
But the flight reductions have also impacted airline staff, with the Qantas group being left with a surplus of about 700 full-time staff.
‘We have 30,000 employees across the group,’ Joyce told reporters.
‘The way we’ll manage it is to ask across the 30,000 people, for people to take annual leave, long-service leave and use their leave balances, which are quite considerable.’
He said asking staff to take paid leave would give the airline an opportunity to manage the staffing situation for at least the upcoming six months.
Joyce added that the flexibility in how to respond to the coronavirus and maintain the airlines strategic position more broadly is important.
The announcement of the flight reductions came as Qantas revealed a 3.9 per cent drop in profit to $445 million in the first half of the financial year.
By 10.25am (AEDT), the airlines shares had risen 7 per cent to $6.74.