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Qantas takes capacity knife to Sydney - Tokyo and Melbourne -Singapore
March 13th 2020
Qantas Group CEO, Alan Joyce, said this week the Australian carrier planned to reduce capacity on its Asia network by 31% in response to the coronavirus pandemic that has crippled demand for air travel. Read More »
The network changes included down-gauging the daily Qantas Sydney-Tokyo Haneda service from a 747-400 to A330 equipment and reducing Melbourne-Singapore to seven flights a week, from 14 a week. The service reductions will be in place until September.
The previously announced suspension of the airline’s Sydney-Shanghai nonstop and frequency reductions between Australia and Hong Kong are extended to mid-September.
Qantas said the spread of COVID-19 into Europe and North American in the last 14 days and the continued spread of the virus in Asia had resulted in a "sudden and significant drop in forward travel demand".
“We expect lower demand to continue for the next several months. Rather than taking a piecemeal approach, we are cutting capacity out until mid-September," Joyce said in a statement.
Joyce said the reduction in flying meant about 2,000 jobs were surplus to requirements. But he told reporters in Sydney on Tuesday redundancies would be a last resort.
“When revenue falls you need to cut costs and reducing the amount of flying we do is the best way for us to do that," he said.
“Less flying means less work for our people, but we know the coronavirus will pass and we want to avoid job losses wherever possible.
"We’re asking our people to use their paid leave and, if they can, consider taking some unpaid leave given we’re flying a lot less."
The overall reduction in international capacity was 23%, compared with the same time last year. In percentage terms, the Asian region represented the largest cut, at 31%, followed by the U. S. (19%), the UK (17%) and Tasman (10%).
Qantas has delayed the launch of Brisbane-Chicago nonstop flights and suspended Melbourne-San Francisco and the recently introduced Brisbane-San Francisco service.
As well, the Australian carrier's daily Sydney-Singapore-London Heathrow service will be temporarily re-routed through Perth and served with 787-9s instead of the A380.
Only two of Qantas's 12 A380s will be operating flights, with eight grounded and two undergoing scheduled heavy maintenance and cabin upgrades, the airline said.
Qantas management will forfeit their annual bonus for 2019-2020 and the group’s executive management will take a 30% pay cut. Joyce will take no salary for the rest of the financial year.
Board directors will have their fees reduced by 30% for the remainder of the fiscal year and airline group chairman, Richard Goyder, will take no fees between now and June 30 2020.
A share buyback planned for later in 2020 was cancelled, saving A$150 million (US$94.8 million) in cash. Qantas shares have fallen by about 48% so far in calendar 2020.
