Air New Zealand has joined Qantas in cutting capacity to Asia and across the Tasman to counter the impact of the coronavirus, COVID-19 on the airline and it’s estimated as $NZ75 million ($A72 million) cost.
Four days before it was due to release its interim results for 2019-29, the airline revealed that it would cut capacity into Asia by 17% between now to June, including the suspension of Seoul services from March 7.
Air New Zealand had already suspended flights to Shanghai and cut flight frequency to Hong Kong, as the COVID-19 outbreak seems to be taking a grip on South Korea and perhaps continuing to be a concern in Japan.
Flights between New Zealand and Australia will be reduced by 3% from March through May, while domestic capacity will be cut 2% in March and April to counter a slowdown in inbound tourism.
“The airline’s revenue outlook for the remainder of the year is expected to be adversely impacted as a result of softer demand for travel to and from Asian destinations,” Air New Zealand said in a statement.
“Weaker forward bookings for travel on the Tasman and domestic networks have also emerged as a result.”
Qantas last Thursday revealed a 15% cut in capacity into Asia and lopped 6% from the Trans-Tasman routes and 2% domestically.
The financial impact on Qantas would be up to $150 million this year, but this would be partly offset by lower fuel costs.
Air New Zealand said it would take a hit of $NZ35 million to $NZ75 million, prompting it to downgrade its full-year profit guidance from between $350 million and $450 million to between $300 million and $350 million.
Air NZ shares were down 5.3% at $A2.48.
