Qantas Airways and Air France-KLM became the latest airlines to announce massive cuts in flights as the coronavirus impedes travel.
Norwegian Air has temporarily halted flights to and from Italy because of the coronavirus outbreak, the budget carrier said on Tuesday, adding to the company's financial woes.
Qantas cut almost a quarter of its international flights for six months, grounded most of its giant A380 jets and slashed management pay as the outbreak hammers demand for travel. Air France said it plans to cancel 3,600 flights this month, reducing its European network by 25 per cent.
Qantas's biggest reductions are in Asia, where the Australian airline's capacity is now down 31 per cent from a year earlier, Qantas said Tuesday. The carrier also cut services to the US and the U.K., or put smaller planes onto existing routes.
Eight of Qantas's 12 Airbus A380s will be grounded until mid-September. The overhaul, one of the most dramatic responses to the outbreak by any airline worldwide, was accompanied by wide-ranging cost cuts. Qantas's group executive managers and board members will take a 30 per cent pay cut for the rest of the financial year ending June. Chief executive Alan Joyce won't be paid at all.
“In the past fortnight we’ve seen a sharp drop in bookings on our international network,” Mr Joyce said in the statement. “We expect lower demand to continue for the next several months.”
Air France-KLM’s French airline will cut 13 per cent of its long-haul capacity this month, while Dutch sister carrier KLM will reduce long-haul by a similar amount.
The reductions announced Tuesday are Qantas's third – and deepest – cuts in less than a month. The sudden escalation shows how swiftly demand has cratered as the virus takes hold in North America and Europe. The outbreak will cost global airlines as much as $113 billion in lost passenger revenue this year, the International Air Transport Association said last week. Only a couple of weeks earlier, IATA had expected a $30 billion hit.
Speaking to reporters on a call, Mr Joyce said Qantas could make yet more cuts to services. "We can go a lot deeper," he said. He said Qantas has also asked Airbus SE for more time to confirm an order for as many as 12 A350-1000 jets for ultra-long-haul services from Sydney to London and New York. The reductions bring Qantas's total international capacity cuts, including at its low-cost carrier Jetstar, to 23 per cent from a year earlier.
The Sydney-based company is asking all employees to take paid or unpaid leave as fewer planes take to the air. Qantas also scrapped a stock buyback to save A$150 million in cash. “We know we can ride this out,” Joyce said on the call. “Not all airlines in the world will.”
Norwegian Air’s move came as the whole of Italy has been placed under lockdown until next month in an attempt to beat the spread of the virus.“Due to quarantine restrictions that were recently imposed across Italy, Norwegian has decided to temporarily halt its flights,” the airline said.
A flight from New York to Rome was cancelled on Monday, Norwegian said, while flights between Oslo and Rome will similarly be scrapped on Tuesday.
The cancellations add to an already difficult financial situation at Norwegian, which last week scrapped its 2020 outlook and has lost 70 per cent of its market value this year.
Britain's Flybe collapsed on March 5th as booking faltered amid the virus outbreak, and a further shakeout in the industry is seen as likely, industry experts have warned.
A pioneer in low-cost transatlantic travel, Norwegian in recent years launched flights from the Italian capital to major US cities such as Los Angeles and Boston, as well as New York.
On March 5th, as the coronavirus outbreak escalated, the company said it would cancel 22 flights between Europe and the United States from March 28th to May 5th.
Norwegian last week also cancelled flights to and from the worst affected areas of northern Italy.– Reuters