Only two of Qantas’ A380s remain in service after the airline grounded its other eight so it can use smaller planes on routes which have suffered a drop in demand in the wake of the virus outbreak.
The Qantas Group, which includes Jetstar, is reducing its capacity by 25% until mid-September, resulting in the grounding of nearly 40 aircraft, because of plummeting demand for air travel globally.
CEO Alan Joyce will not take his A$24 million salary and executive management will take a 30% pay cut as part of the company’s measures to rapidly reduce costs.
The sudden spread of the virus over the last two weeks has seen Qantas cut flights not only on Asian routes but also to North America and Europe. Capacity on Asian routes is down 31% compared to the same time last year while reductions to the US and UK stand at 19% and 17%, respectively.
Because of continuing demand for the direct Perth-London service, Qantas’ existing Sydney-Singapore-London return service will be temporarily re-routed to become a Sydney-Perth-London service from 20 April. The start of Qantas’ new Brisbane-Chicago route will be delayed from 15 April to mid-September.
Jetstar will make significant cuts to its international network, including suspending flights to Bangkok and reducing flights from Australia to Vietnam and Japan by almost half.
Additional measures to cut costs include a freeze of all non-essential recruitment and consultancy work and asking all employees to take paid or unpaid leave.
Mr Joyce, said that he expected to see lower demand to continue “for the next several months” and so must slash capacity instead of taking “a piecemeal approach”.
“We retain the flexibility to cut further or to put capacity back in as this situation develops,” he said.
“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.
“Less flying means less work for our people, but we know 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.”
Mr Joyce added: “It’s hard to predict how long this situation will last, which is why we’re moving now to make sure we remain well positioned. But we know it will pass, and we’ll be well positioned to take advantage of opportunities when it does.”