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Qantas will cut capacity across its international and domestic network in response to the coronavirus crisis, which the airline now expects will deliver a blow of up to $150 million to its profit this year.
The airline on Thursday morning said it will cut flights into Asia by 16 per cent at least to the end of May, pulling back on flights to Hong Kong and Singapore and keeping flights to Shanghai suspended.
The coronavirus outbreak has hit Qantas. CREDIT:AAP IMAGE/PETER RAE
Jetstar flights to Japan and Thailand, and within Asia will be cut by 14 per cent.
With the loss of passengers feeding into the rest of its network, domestic flights will be cut by around 2 per cent, and flights to New Zealand will be cut by 6 per cent, the airline said.
“What’s important is that we have flexibility in how we respond to coronavirus and how we
maintain our strategic position more broadly," Qantas chief executive Alan Joyce said in a statement to the ASX on Thursday.
“We know demand into Asia will rebound. And we’ll be ready to ramp back up when it does.”
The capacity cuts are the equivalent of grounding 18 aircraft across Qantas and Jetstar, leaving the equivalent 700 full-time roles idle.
Mr Joyce said the airline would put staff on annual leave, using their existing leave balances, and freeze recruitment “to avoid job losses” and “help ride this out”.
He said the cost of the health crisis on the airline would be between $100 million and $150 million this year, which is close to three times the cost of the 2003 SARS outbreak.
In late January analysts were estimating the cost to be around $61 million.
Qantas announced its route cutbacks as it reported a statutory half-year profit of $445 million for the six months through December, down 4 per cent from the same period last year. Underlying profit before tax was at $771 million, down 0.5 per cent from the prior-year period.
This article first appeared on www.theage.com.au
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