Qantas will cut its international flights by nearly 25% over the next six months and delay an order for ultra long-haul A350 planes as part of massive changes in response to a coronavirus-led plunge in passenger demand.
Qantas’ chief executive and chairman will take no salary for the rest of the current financial year, the management team will receive no bonuses and all staff are being encouraged to take paid or unpaid leave.
“We are using every lever we can to avoid redundancies,” Qantas Chief Executive Alan Joyce told reporters in Sydney.
“We think we can do that into September with these cuts.
“I think this will be survival of the fittest, and I think Qantas is one of the fittest and [most] dynamic airlines in the world.”
He added not all airlines will make it, “We know we can ride this out. Not all airlines in the world will.”
Airlines around the world are experiencing a collapse in demand due to the coronavirus, which an industry body last week estimated could lower passenger revenue by as much as $113 billion this year.
The biggest reductions for Qantas remain focussed on Asia (now down 31% compared with the same period last year). Capacity reductions to the United States (down 19%), the UK (down 17% and Trans-Tasman (down 10%) will also be made in line with forward booking trends.
The carrier is now grounding the equivalent of 38 planes, more than double the 18 it had announced last month.
That includes plans to ground eight of its 12 A380 superjumbos until mid-September, with two remaining flying and the other two in maintenance.
The carrier had been expected to place an order for up to 12 A350-1000 planes capable of the world’s longest flights from Sydney to London by the end of the month.
Airbus had set that deadline on the basis the production slots were potentially valuable and could be sold to other airlines, Joyce said.
“In the current environment that doesn’t seem to be the case. Nobody is ordering aircraft,” he said. “We have asked Airbus for a delay in the decision. 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.”
Airbus did not respond immediately to a request for comment.
Joyce said the airline remains hopeful of pilots voting in favour of a proposed pay package for the flights. Qantas last month said it would hire other pilots to fly the A350s if a deal was not approved.
The union has not yet issued a formal recommendation to Qantas pilots on the issue. Two leaders last week sent memos, viewed by Reuters, advising pilots to reluctantly approve the company’s offer but the pair do not represent the entire union committee.
With reporting by Jamie Freed of Reuters.