Qantas has cut its total capacity to Asia by 15 per cent until at least the end of May, with its only route to mainland China suspended for the same period, after demand dropped due to the coronavirus outbreak.
CEO Alan Joyce said the group had taken the step to “limit our exposure to softening markets” and that the company would try to limit the impact on staff through annual leave.
Joyce added: “What’s important is that we have flexibility in how we respond to coronavirus and how we maintain our strategic position more broadly. We can extend how long the capacity cuts are in place, we can deepen them, or we can add seats back in when demand rebounds, which we know it will.”
Qantas said it expects to see a negative impact of between AU$100 million and AU$150 million in the second half of FY20.
The airline is not the first to issue a warning on the back of the coronavirus outbreak; Cathay Pacific said it expects its first-half results to be “significantly down” on last year.
“Ultimately, when you look across our portfolio, we’re in a much stronger position than many of our peers and that gives us confidence in our business despite some external uncertainty,” commented Joyce.
Overall, Qantas reported underlying profit before tax of AU$771 million for the first half of FY20 – AU$4 million less than the same period last year owing to higher foreign exchange-related cost impacts, disruption in Hong Kong and an increase in operating costs from the sale of domestic airport terminals.
Joyce said: “Overall, our performance in the first half was very positive and it shows we remain in a strong position going forward.”
qantas.com