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Qantas will contact affected customers and offer alternative flights. Photo: Attila Csaszar

Qantas slashes overseas flights

Qantas has slashed the capacity of its international flights by almost a quarter for the next six months due to the coronavirus impact.

There will be fewer Qantas and Jetstar flights, and smaller planes, travelling to Asia, the US, the UK and New Zealand, until mid-September as fewer people want to fly.

The changes reduce capacity by 23 per cent compared to the same period last year.

The decision means 38 planes will be grounded.

Flights to Asia are most affected. Capacity for this continent will be reduced by 31 per cent.

The US is the next-most affected destination - a 19 per cent cut.

Qantas will contact affected customers and offer alternative flights.

Chief executive Alan Joyce said there had been a sharp drop in bookings over the last fortnight for international flights.

He said the business was trying to reduce costs while giving certainty to customers.

The reduced flight schedule means more than 2,000 workers will not be needed.

To avoid redundancies, staff will be asked to take leave.

Mr Joyce said Qantas was in a good position to overcome financial impact.

"We'll be trying to pull every lever that we can to make sure that the group gets through this," he said.

Airlines across the world have cancelled many flights. Tourists have delayed travel, and some countries such as Australia have banned people arriving from nations highly-affected by the virus.

Qantas has reduced domestic flight capacity by five per cent.

Mr Joyce will not take a salary for the remainder of the financial year as the airline tries to limit costs.

His peers will accept similar reductions.

Chairman Richard Goyder will take no fees, while group executive management will take a 30 per cent pay cut and board members will accept a 30 per cent reduction in fees.

Management will not receive bonuses, and non-essential recruitment and consulting has been postponed.

Transport Workers Union of Australia national secretary Michael Kaine said the group would work cooperatively with Qantas to keep the airline viable.

"However. we want a commitment that Qantas will reimburse its workforce with extra leave when the business returns to full health," he said.

"It is not reasonable to ask Qantas ground staff, baggage handlers and flight attendants to take a hit without also asking shareholders to sacrifice dividends."

Mr Kaine said the airline should also commit to no further outsourcing and agree to maximise the hours of its permanent workforce.

Mr Joyce said he expected lower demand to continue for several months and that the business would record a loss for its last quarter.

The board has cancelled an off-market share buyback, which was announced in February.

Qantas shares were up 2.4 per cent to trade at $4.24 at 12:15pm AEDT.

Total Shareholder Return as at 30/09/16

1 year TSR5 year TSR
156thAmcor19%24%
164thLendlease17%20%
205thOrigin Energy4%-11%
287thQantas-9%19%
669 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
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Revenue

9th-Qantas$16,200.0m
10th-Lendlease$15,350.3m
13th↓Amcor$12,811.1m
15th-Origin Energy$11,981.0m
76 listed non wa companies ranked by revenue.
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