Australia’s Qantas and Jetstar announced further draconian cuts to their schedules and said both airlines would suspend all international flights starting in late March after the country’s government recommend its citizens defer all overseas travel because of the spreading COVID-19 coronavirus that has killed almost 9,000 people worldwide.
Qantas said it was also cutting domestic flights by 60 percent and said two-thirds of its employees would be “stood down” in order to preserve as many jobs as it could over the longer term. A planned A$201 million shareholder dividend payment would also be deferred to September as a way to conserve cash.
Qantas had earlier this week said it planned to cut 90 percent of international flights and about 60 percent of its domestic routes, but that was before the Australian federal government said citizens should defer any international travel. The airline said it would continue its international flights through the end of March to help citizens now overseas return home.
More than 150 aircraft will be temporarily grounded, including all of Qantas’ A380s, 747s and B787-9s and Jetstar’s B787-8s. Discussions are progressing with airports and government about parking for these aircraft, Qantas said in its statement announcing the changes.
The Qantas Group said it is making the following changes to its international routes:
- All regularly scheduled Qantas and Jetstar international flights from Australia will be suspended from end March until at least end May 2020. Some flights may continue in order to maintain key links, based on ongoing discussions with the federal government.
- Jetstar Asia (Singapore) will suspend all flights from 23 March to at least 15 April 2020.
- Jetstar Japan has suspended international flights and cut domestic flying.
- Jetstar Pacific (Vietnam) has suspended international flights and will significantly cut domestic flying.
On its domestic routes, Qantas said it will “maintain connectivity to almost all Australian domestic and regional destinations that Qantas, QantasLink and Jetstar currently operate to. The 60 percent reduction in capacity will come mostly from a significant reduction in flight frequency, but also route suspensions and postponing a number of new route launches”.
Job losses
In order to preserve as many jobs as possible longer term, Qantas and Jetstar will stand down the majority of their 30,000 employees until at least the end of May 2020. During the stand down, employees will be able to draw down on annual and long service leave and additional support mechanisms will be introduced, including leave at half pay and early access to long-service leave. Employees with low leave balances at the start of the stand down will be able to access up to four weeks of leave in advance of earning it. “Unfortunately, periods of leave without pay for some employees are inevitable”, Qantas said.
Senior group management executives and the board have increased their salary reductions from 30 percent to 100 percent until at least the end of this financial year, joining the chairman and group CEO in taking no pay. Annual management bonuses have also been cancelled.
CEO Alan Joyce said “the efforts to contain the spread of coronavirus have led to a huge drop in travel demand, the likes of which we have never seen before. This is having a devastating impact on all airlines. We’re in a strong financial position right now, but our wages bill is more than A$4 billion a year. With the huge drop in revenue we’re facing, we have to make difficult decisions to guarantee the future of the national carrier.
“The reality is we’ll have 150 aircraft on the ground and sadly there’s no work for most of our people,” Joyce added. “Rather than lose these highly skilled employees who we’ll need when this crisis passes, we are instead standing down two-thirds of our 30,000 employees until at least the end of May.
“This is a very hard set of circumstances for our people, as it is for lots of parts of the community right now. No airline in the world is immune to this, with the world’s leading carriers making deep cuts to flying schedules and jobs. Our strong balance sheet means we’ve entered this crisis in better shape than most and we’re taking action to make sure we can ride this out.”
