Qantas in damage control slashing seats and cutting top executives’ salaries and fees

Tuesday's passenger capacity cuts are on top of two sets of reductions already announced by the airline.

Tuesday's passenger capacity cuts are on top of two sets of reductions already announced by the airline. Photo: Getty

Qantas is slashing seats on international flights and pay to its top executives as it reels from the demand hit from the global coronavirus outbreak.

Chief executive Alan Joyce will take no salary for the remainder of the financial year, while his peers will accept similar reductions and board chairman Richard Goyder will not get fees.

Qantas’s executives will also take 30 per cent pay cuts and board members will have their fees reduced by 30 per cent.

On Tuesday morning, Mr Joyce said while redundancies were a last resort, the changes meant about 2000 jobs were surplus to requirements.

He said the company was pulling “every lever that we can to make sure that the group gets through this environment”.

“This will be a survival of the fittest,” he said.

The airline had the capability to expand and grow, if the marketed responded. But it expected “long tail and a slow recovery”.

“If it gets worse, we can always bring forward the retirements of aircraft like the 747. We can bring forward the grounding of more of the A380s. We have grounded 10 of the 12 aircraft,” Mr Joyce said.

“We could do that if it gets worse. If it gets better, our intention is to put those aircraft back in the air. And we think this will rebound.”

The cuts come on top of reductions already confirmed – and are the equivalent of grounding 38 Qantas and Jetstar planes in Australia and internationally.

Qantas announced other cuts less than a week ago, with flights to Tokyo, Sapporo, Osaka, Hong Kong and Auckland most affected.

“Further changes are expected,” it said at the time.

With Tuesday’s reductions, the total international capacity of Qantas and its budget arm Jetstar will be cut by 23 per cent on the same time in 2019. The reductions will apply until mid-September 2020.

Mr Joyce said Tuesday’s move was in response to a sharp drop in international bookings in the past fortnight as the COVID-19 outbreak worsened.

“We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we’re cutting capacity out to mid-September,” he said.

jetstar flights cancelled

Jetstar will also cut flights in Australia and overseas.

Worldwide, there have been more than 110,000 confirmed cases of coronavirus and more than 3801 deaths. Early on Tuesday (Asutralian time), Italy – which has Europe’s worst outbreak – took the unusual step of locking down the entire country to try to halt the spread of the infection.

Qantas’s biggest cutbacks remain focussed on Asia (now down 31 per cent compared with the same period in 2019). China remains the country worst hit by the virus, even though it is now spreading more rapidly in other countries.

There are also further cuts to capacity on flights to the US (down 19 per cent), Britain (down 17 per cent) and Trans-Tasman (down 10 per cent) – which the airline said was in line with forward booking trends.

Many of the reductions will come through the use of smaller planes and reduced flight frequency, rather than quitting routes altogether.

Qantas said eight of its largest aircraft, Airbus A380s, will be grounded until mid-September. Two are already grounded for maintenance and upgrades, while only two will remain in active use.

Jetstar will also make significant cuts on its international network. It will suspend flights to Bangkok and cut flights from Australia to Vietnam and Japan by almost half.

Jetstar’s daily Gold Coast to Seoul flight was suspended last week.

Both airlines will also cut domestic capacity by 5 per cent until mid-September.

Rival Virgin Australia also cut domestic and international capacity in February, citing the hit to its bottom line from the coronavirus.

Air New Zealand has also cut capacity on its Asian, Trans-Tasman and domestic networks. On Monday, it said it would officially withdraw its full-year earnings guidance issued on February 24, “due to increased uncertainty surrounding the duration and scale of the COVID-19 outbreak”.

Topics: Qantas
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