Air New Zealand on Monday, then Qantas yesterday announcing huge capacity cuts for the next few months to handle the slow down in travel from the COVID-19 crisis.
At the same time, the airline has asked Airbus to delay the delivery of the new 350 jetliners it ordered last year.
Qantas told the ASX before trading opened that it now planned to slash almost a quarter of its international capacity thanks to the slide in demand from the coronavirus outbreak.
This will leave all but two of its 10 A380 aircraft grounded.
Shares were down 5% in the early morning slide to $3.97 but recovered to be 7.2% higher at the close at $4.45.
Chief executive Alan Joyce told the ASX the past fortnight has resulted in a “sharp drop” in forward bookings across the company’s overseas network.
“We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we’re cutting capacity out to mid-September. This improves our ability to reduce costs as well as giving more certainty to the market, customers and our people,” he said.
Mr. Joyce will not receive a salary for the remainder of the financial year while management will take a 30% pay cut.
To avoid redundancies and job losses, the airline is asking all Qantas and Jetstar employees to take paid and unpaid leave.
Three weeks ago Qantas cut capacity across both international and domestic networks equivalent to grounding 18 aircraft until the end of May. The airline also estimated the virus would slash up to $150 million from its profit this year, nearly twice the impact of the SARS outbreak in 2003.
Then last week the airline revealed another round of cuts to services to Japan, Hong Kong, and Auckland.
The airline’s share price has been decimated in recent weeks due to the coronavirus.
Qantas meantime has asked Airbus for an extension to a March-end deadline to order up to 12 A350-1000 planes capable of the world’s longest commercial flights from Sydney to London
CEO Alan Joyce told the media yesterday:
“We would rather wait for the coronavirus issue to be out of the way before we put a firm aircraft order in for the A350,” he said.
His request won’t be the last from an airline to Airbus or Boeing which is in terrible trouble with the grounding of the 737 Max and worries about the 787.
