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US airlines warn of liquidity fears with $US10 billion monthly cash burn

5G
Photo: O'Hare International Airport.

US airlines are burning through cash at a rate of $US10 billion a month as planes fly less than a third full, an industry group has warned.

The estimate by Airlines For America (A4A)  comes as airlines are seeking $US50 billion in government support to help battle the ravages of COVID-19.

That would include $US25 billion in grants for passenger air carriers and $US4 billion for cargo operators. The rest would be in the form of loans or loan guarantees.

A4A joined other industry groups in an urgent plea to US politicians, including Treasury Secretary Steven Mnuchin, to work as quickly as possible to financially protect the industry and the 11 million US jobs directly or indirectly supported by aviation.

READ: Air New Zealand cancels dividend as it secures $NZ900m loan guarantee.

Signatories to a letter sent to lawmakers Thursday include unions as well as airports, maintenance organizations and general aviation groups.

The organizations said actions taken to combat the diseases globally had been fluid and were rapidly evolving on an hour-by-hour basis.

“The rapid spread of COVID-19 and the government- and business-imposed restrictions on air travel are having never-before-seen impacts on US aviation and our employees,’’ they said.

“In the short space of two weeks, aviation industry stakeholders have seen their positions of strong financial health deteriorate remarkably rapidly, and challenges are growing for all stakeholders.

‘The downturn in demand for commercial air transportation and shipping related to COVID-19 is vast.

“For passenger carriers alone, net bookings for the next few months are down 100 – 200 percent, as cancellations are rapidly outpacing new bookings and trending worse each day.”

The letter said the US industry did not want to furlough employees and needed them to retain their positions to be ready to lead a recovery.

“What appeared to be a distant possibility just weeks ago has come to the forefront; we now face legitimate liquidity concerns and questions about our ability to meet ongoing debt obligations,’’ it added.

“This crisis hit a previously robust, healthy industry at lightning speed, and the government response needs to be just as swift, in order to save it.

“In the frankest of terms, the current economic environment is simply not sustainable.”

It also noted US airlines had taken or planned more than $US30 billion in “self-help” in response to COVID-19 in the current calendar year.

“The US aviation industry, including key industry stakeholders, is a critical component of the US economy,’ it said.

“Civil aviation drives more than 5 percent of U.S. GDP and is necessary to the success of other industry sectors – which makes it unique in its significance to the health of the overall U.S. economy.”

Aerospace manufacturers, including Boeing, are also seeking $US60 million in assistance.

“Boeing supports a minimum of $60 billion in access to public and private liquidity, including loan guarantees, for the aerospace manufacturing industry,’’ it said.

“This will be one of the most important ways for airlines, airports, suppliers and manufacturers to bridge to recovery.

“Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain.

“The long-term outlook for the industry is still strong, but until global passenger traffic resumes to normal levels, these measures are needed to manage the pressure on the aviation sector and the economy as a whole.”

Air New Zealand cancels dividend as it secures $NZ900m govt. loan

Air NZ
Photo: Airbus

Air New Zealand has completed a deal for a $NZ900m government standby loan facility as it tackles the devastating impact of COVID-19.

The arms-length facility provides the Kiwi carrier with back-up funding it can draw on if its cash reserves run low.

The airline also canceled its dividend and its shares nose-dived by more than a third when a trading halt was lifted after the loan announcement Friday.

The coronavirus crisis has sent airlines into a tailspin worldwide and threatens the viability of some carriers.

READ: Australia and New Zealand shut down foreign arrivals.

The loan is intended to ensure the Kiwi carrier is not one of them.

Chief executive Greg Foran, now in his seventh week at the helm of the airline, said he had been focused on ensuring Air New Zealand had the best chance of getting through COVID-19.

“We were operating 3600 flights a week it’s going to fall to below 1500 over the next few weeks,” he said.

“So this business looks different, feels different to the one that it was seven weeks ago and it’s likely to be that way over the next few months.”

Foran said the airline had seen it as important to secure finance quickly and that he expected the loan to see the airline through the crisis if it continued.

“We’ve gone through our forecasts and $NZ900 million is the right number for us,” he said.

“I can’t speculate any more than anyone else on how long this will go and the impact but, based on our best forecasts, we’re very happy with that number.”

Emphasizing that the situation was evolving,  Foran said the airline’s forecast indicated it would not need to access the funding in the near term.

He said the hope was that the airline wouldn’t need the loan but it was there if it did.

“And if we do use it, part of our objective will be to pay it back as quickly as we can,” he said.

He also noted that Air New Zealand had proven its resilience over many years.

“We’re going to get through this,” he said. “I’m very confident of that. At some point, we’ll see booking begin to grow and we’ll start putting some more flights back on.”

Both Foran and Air NZ chairman Dame Therese Walsh acknowledged the Government’s support of the loan facility.

“The Government and Treasury moved swiftly to ensure that Air New Zealand had financial certainty as demand for flights domestically and internationally has rapidly fallen due to travel restrictions implemented by countries around the world,” Walsh said.

“The loan facility ensures that Air New Zealand can continue to play a vital role in connecting New Zealanders and our businesses with each other here at home and around the world.”

The airline is 52 percent owned by the government and New Zealand Finance Minister Grant Robertson said New Zealand was at risk of not having a national airline without the intervention.

“Air New Zealand has a unique and critical role in our economy and society,” he said.

“Also, the government owns 52 percent of the company, which means we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier.”

The facility will be provided in two tranches: a $NZ600m tranche with an effective annual interest rate expected to be between 7 percent and 8 percent and second tranche of $NZ300m with an interest rate in the order of 9 percent.

The facility will be able for 24 months with interest rates of both tranches stepping up by 1 percent if the facility remains after 12 months.

The airline said the debt funding would be used to support its business operations and is subject to conditions that include an operating finance plan involving the New Zealand government.

The airline also canceled the 2020 interim dividend of 11 cents a share, worth $NZ123m, announced last month.

This was a pre-requisite of the standby loan but the airline’s board of directors said they believed it was in the best interests of the airline given the highly uncertain environment that exists.

Other terms of the agreement prevent Air New Zealand paying any payments or distributions to shareholders while any amount is available to be drawn and the airline has provided certain of its assets as security.

The New Zealand Government can also seek repayment through a capital raise after six months or convert the loan into equity.

Air New Zealand recently brought forward the planned closure of its Heathrow base and is suspending the majority of its international flights as well as cutting back domestic services as part of its response to the coronavirus outbreak.

The airline is in talks to stand down up to 30 percent of its staff and is looking at offering options such as taking leave, leave without pay and voluntary exits.

Australia’s Rex cuts regional flying by 45 percent

regional lifeline aid
Photo: Rex

Regional carrier Rex will cut capacity by 45 percent from April 6 and suspend three routes as it battles the slump in demand caused by COViD-19.

Suspended routes are Sydney-Armidale, Sydney-Newcastle and Adelaide-Port-Augusta.

Under review are all of its West Australian services as well as Queensland routes other Cairns-Bamaga.

READ: Even on its darkest day, Qantas prepared to bounce back.

The airline said it would also proceed with announced plans to exit Ballina-Sydney from March 29 and Kangaroo Island-Adelaide from July 1.

Rex general manager network strategy and sales Warrick Lodge described the airline’s operating environment as “extremely fluid’ and said the airline was monitoring the situation closely.

“If the situation worsens we may be forced to further reduce capacity in the interests of maintaining essential regional air services,” he said.

“This capacity reduction alone will not be enough and we have reached out to local councils (airport owners) to seek a reduction in airport charges to keep operating costs to a bare minimum so that the reduced services can be sustainable.”

Lodge said the airline was appreciative of the support by local authorities such as Parkes Shire Council, which proactively approached Rex to grant a total waiver of airport charges during the carrier’s “hour of need”.

“Rex promises to also stand by these local councils in their moment of adversity when Rex is solidly back,” he said.

The regional carrier is already the beneficiary of a $A715m federal government packages that included relief from fees and charges and is now calling for state governments to divert funds from airport infrastructure to support regional carriers.

“All State Governments have substantial budgets for regional airport infrastructure,” Rex deputy chairman John Sharp said.

“Now is the time to divert a portion of this to help out the regional carriers otherwise there will not be any airline to fly to the renovated airports.”

Rex is Australia’s biggest independent regional carrier and has a fleet of 60 Saab 340 aircraft.

Under normal circumstances, it flies about 1500 weekly flights to 60 destinations around Australia.

Australia and New Zealand shut down foreign arrivals

Tourism Australia
Photo: Wiki-Ian, Wikimedia Commons.

Leaders in Australia and New Zealand pulled the trigger on an already mortally-wounded international tourism industry on Thursday and banned foreign arrivals.

Australian Prime Minister Scott Morrison announced that non-citizens and residents are now banned from entering Australia after 9 pm Australian Eastern Daylight Time Friday.

The move was made in coordination with a similar ban by the New Zealand government that effectively stops all people except New Zealanders from boarding a plane to the Land of the Long White Cloud after 11:59 pm Thursday.

READ: Qantas and Jetstar suspend international flights, slash workforce.

Citizens and residents returning home to both countries will still be expected to enter isolation for 14 days.

Morrison said the move was a crucial measure to try and stem the spread of COVID-19 and had been made after further consultation with the national security committee.

He said overseas tourism was already down to about a third of normal levels and the overwhelming COVID-19 cases in Australia had been imported.

“We have about 80 percent of the cases … in Australia that are either the result of someone who has contracted the virus overseas or someone who has had direct contact with someone who has returned from overseas,” he told reporters in Canberra.

New Zealand Prime Minister Jacinda Arden said the spread of the COVID-19 in other parts of the world had made it increasingly clear New Zealand needed to take even stronger border measures.

“Today’s decision stops any tourist, or temporary visa holder such as students or temporary workers, from coming to and entering into New Zealand,” she said.

“The rapidly worsening global health situation means that the threat to people’s health in New Zealand has risen, even in the five days since we took the world-leading step of requiring 14 days of self-isolation for anyone entering the country.

“All of the cases of COVID-19 identified in New Zealand relate to people traveling to New Zealand and bringing the virus with them – therefore we need to further restrict the risk of people bringing the virus into New Zealand.”

Adern said a small number of exemptions could be sought for humanitarian reasons, essential health workers and the citizens of Somoa and Tonga who needed to travel to New Zealand for essential reasons.

The bans come as airlines in both countries have cut most or all of their international flying and many overseas carriers have suspended or reduced services.

Qantas and Jetstar announced Thursday that they were suspending international flights from late March until at least the end of May and standing down two-thirds of the group’s 30,000 employees in response to government restrictions.

The southern Australian state of Tasmania also announced it was imposing 14-day self-isolation requirements on most visitors, prompting Qantas to reduce its schedule to the island.

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Even on its darkest day, Qantas prepares to bounce back

Joyce
Qantas chief executive Alan Joyce Photo: Qantas

Even as Qantas experiences the worst chapter in its 100-year history, the Flying Kangaroo is planning for the day it can bounce back.

Qantas chief executive Alan Joyce made no bones on Thursday about his view Australia’s national carrier is better placed than most to weather the aviation apocalypse currently consuming the industry.

And he revealed a team was already working on plans to get the airline back in the air when The COVID-19 wheel finally turns.

READ: Qantas and Jetstar suspend international flights, slash workforce.

It was, Joyce observed, a terrible day for Qantas on Thursday as he announced the suspension of scheduled international flying and prepared to stand down two-thirds of the airline’s workforce.

He admitted this was not the kind of action he envisaged he would ever have to take as CEO but it is the kind of action airlines globally are now being forced to take — and some are better placed than others.

The industry was once notorious for losing money but in recent years the smart players have kept a tighter reign on costs and capacity to move back into the black and build up cash reserves for a rainy day.

But airlines, like most businesses, need cash flow to keep paying the bills and with that now drying up as demand evaporates, they are being forced to dramatically reduce expenditure to preserve cash to pay the bills.

Qantas has been among the airlines that have kept money in the bank and Joyce moved on Thursday to dispel any doubts it would be a survivor.

“Qantas is in a really strong position,’’ Joyce told reporters on a conference call on Thursday.

“We are one of the strongest airlines in the world. Over 10 years, we’ve made the tough decisions. We’ve built up a very strong cash balance, we’ve built up a very strong balance sheet and we have an investment-grade credit rating.

“We’re raising some money on some aircraft out there at the moment and we’re getting a very positive response from our lenders (and) we have a standby facility that’s quite substantial.”

The airline is working through the staff furloughs on a group-by-group basis. Some areas, such as crews on widebody international aircraft, will be hit hard while others, including call center workers and engineers tasked with parking and maintaining aircraft, less so.

Some will be able to burn leave or long-service leave while others are facing leave without pay.

Qantas is working with partners such as Woolworths to try and find work for those in the latter category and has offered to advance them four week’s annual leave they have yet to earn.

Joyce, who has forgone his salary until at least the end of the financial year,  said the airline couldn’t pay its staff when there was no work out there and it would drain the airline’s cash too fast.

But he said the dramatic actions taken with capacity, the stand-down and with others such as suppliers “gives us a long runway, that gives us a long time”.

“Nobody knows when this is going to end,’’ he added. “We’re going to look after ourselves, we’re going to make sure we survive in the future.

“And this is fight and survival of the fittest. We are the fittest and although a lot of airlines will go under, we won’t because we’re (taking) dramatic, drastic actions and doing the right thing to make sure the national carrier survives.’’

The problem facing everybody, however, is when will this end.

The situation is fluid and Joyce said the airline was looking at the issue on a week-to-week basis.

“Things are moving very fast and this is all about flexibility and maintaining flexibility,’’ he said, pointing to an announcement that day that Tasmania would require “non-essential” visitors to self-isolate and noting it would likely result in a reduction in schedules.

“So if gets worse we’ll probably take more (capacity) out. If it gets better, we can add stuff back in,” he said.

He said the airline would have to make a decision about planned flying in June and July sometime in early April because of crew rosters.

That would include options ranging from digging deeper or adding capacity back.

He noted that the airline was talking to the federal government about keeping strategic international links open.

“For us, there is unknown about how many ex-pats are offshore and how many want to be repatriated,’’ he said. “The government’s working through that data and it may mean we’ll keep some links open to help people get back.

“There’s also an issue with freight. Strategically there’s some critical freight that comes in from Asia and North America so we’re talking to the government about how we maintain a link there.

“So some of the international operation may be put back in if there are justifications for doing it and that dialogue is continuing with the federal government.”

But Qantas is also preparing for the day the aviation armageddon ends.

The airline says it will maintain the jobs of those stood down and they would have an opportunity to return to Qantas.

“The whole reason we’re taking this approach is to protect jobs in the long term,’’ Jetstar chief executive Gareth Evans told the same conference call.

“We want everybody to get through this together within the organization so when flying gets back on again everybody is still employed by us, still has a job and can contribute to the business as we get out this.”

Joyce also revealed there was a team already allocated to ramping up operations again.

It is parking its aircraft at airport gates around Australia and has also done a deal with Victoria’s Avalon airport to park some there.

“We are confident that we will be putting all these aircraft in the air,’’ he said, noting the airline wanted all the grounded aircraft to return to flying. “That’s why we’re not making people redundant.”

The Qantas boss said a team of engineers was talking to the airports about parking the aircraft and essentially putting them into storage.

“We’re not getting rid of any aircraft, we’re not retiring any aircraft and we will be ready with that team working out how we restart the airline.

“it depends on the timing. We have a plan for three months, six months, nine months, a year. We’ll be planning all of them.

“If it’s more than three months you’ll have recurrence training, you’ll have particular engineering items you need to do and the start-up team is working what that looks like so that we can activate it when we think the market’s turning.

“And we’ll be ready ahead of the curve because we need to be ahead of the curve to help Australia get back on its feet.”

 

Researchers set to begin clinical trials on coronavirus cure

cornoavirus
Professor David Paterson

Queensland researchers are set to begin clinical trials of a potential treatment for COVID-19 – using two existing drugs.

The University of Queensland Centre for Clinical Research Director and Consultant Infectious Diseases Physician at the Royal Brisbane and Women’s Hospital (RBWH) Professor David Paterson said the drugs proved highly effective when first used against the virus in test tubes.

In a statement, Professor Paterson said: “We’re now ready to begin patient trials with the drugs, one of which is an HIV medication and the other an anti-malaria drug.”

READ: IATA slams EU over passenger rights

“Prior to the clinical trials going ahead, the medications were given to some of the first Australian patients infected with COVID-19, and all have completely recovered without any trace of the virus left in their system.

“These medications have the potential to be a real cure for all, unlike the random anecdotal experiences of some people.”

Professor Paterson said the researchers want a large clinical trial involving 50 hospitals across Australia to determine the best way to use the drugs.

“This would involve comparing one drug versus the other, versus the combination of the two drugs,” he said.

That trial is set to start after Queensland mining magnate Clive Palmer donated $1 million to fund the work through the Royal Brisbane and Women’s Hospital Foundation Coronavirus Action Fund.

The trail is set to start at the end of March.

Both drugs are approved and readily available in Australia and other countries.

 

Virgin Australia offers Velocity extension with free status credits

Virgin Australia
Happier times at Virgin Australia.

Virgin Australia is giving free status credits to its frequent flyers along with a 12-month extension to their current status to help them through the COVID-19 crisis.

The status credit gift will see Platinum Velocity members receive 210 status credits while gold members get 105 and silver members 60 credits.

The airline said it was aware it was challenging for Velocity members to maintain their status in the current environment of travel restrictions and reduced flights and was gifting the status credits to give them a helping hand.

It said the 12-month extension meant there were no minimum flight sectors required to maintain their current tier over the next year.

READ: Qantas and Jetstar suspend international flights, slash workforce

“We know these times are tough, and it’s particularly hard where travel is concerned,’’ a spokeswoman said.

“In this changing environment, the safety and needs of our members and guests are key and we are really pleased to be able to offer this 12-month Status extension in addition to the Status Credit gift.

“We hope it gives them some peace of mind.”

The options for both earning and burning Velocity points are about to shrink significantly with Virgin suspending international flying and halving domestic capacity.

Melbourne-Los Angeles will be the first international route to be suspended on March 20.

The decision also means the deferral of the airline’s new Brisbane-Tokyo Haneda and Melbourne-Denpasar services, both of which were due to launch March 29.

The airline will ground five Boeing 777s, an Airbus A330 and 14 Boeing 737s from its international fleet.

Twenty Boeing 737s, two ATRs and five Airbus A330s will also be grounded in the domestic fleet.

The airline said it was still working through route and schedule changes across Virgin and Tigerair Australia.

The airline did not quantify the impact on its workforce but said it was working with staff and unions on a range of measures including the use of accrued annual leave, leave without pay, and in some circumstances, redundancies.

‘We will get through this,’ Delta chief vows

Delta
Photo: Chris Rank/ Rank Studios

Delta Air Lines will park more than 600 aircraft — at least half its fleet — and accelerate the retirement of older aircraft as it rips out 70 percent of its systemwide capacity due to COVID-19.

The US carrier’s international flying will take the biggest hit with more than 80 percent of flying reduced over the next two to three months as it looks to secure more than $US4 billion in cash savings in the June quarter alone.

Revenue for March is expected to be down $US2 billion and the airline already has about 10,000 people taking voluntary leave with calls out for more to join them.

READ: Qantas and Jetstar suspend international flights, slash workforce.

It also consolidating airport facilities, closing the majority of its Delta Sky Clubs until demand recovers, and it has cut spending on contractors and deferred nearly all capital spending, including the delivery of new aircraft.

It has yet to furlough staff but says it can’t take any options off the table.

“Cash preservation remains our top financial priority right now,’’ Delta chief executive Ed Bastian said in a memo to employees.

“Making swift decisions now to reduce the losses and preserve cash will provide us the resources to rebound from the other side of this crisis and protect Delta’s future.”

Delta is joining carriers worldwide in making tough decisions to make sure they are part of what is likely to be a significantly different aviation landscape when the coronavirus crisis ends.

The two major carriers in Australia are among a number of airlines to can nearly all international flying in response to plummeting demand and government restrictions.

But Bastian is confident his airline will be among those left standing when the crisis is over.

“Make no mistake – we will get through this,’’ he told staff. “This is a temporary health crisis and an end will, hopefully soon, be in sight.

“Never underestimate the power of travel as an essential service to our world.

“All of our work over the past decade to fortify our company and transform our business model will serve us well in the weeks and months ahead, as we endure and, eventually, recover.”

Airlines slam EU response on passenger rights

fuel
Photo: Frankfurt Airport

The International Air Transport Association (IATA) and Airlines for Europe (A4E) have slammed as inadequate a European Union response to calls to limit passenger rights during the COVID-19 crisis.

Airlines want a review of the EU’s Regulation 261 passenger rights regime and have been pushing for recognition that passengers should not receive additional compensation in the event of cancellations due to COVID-19.

They also want a limit on care and assistance obligations and flexibility to allow rebooking and vouchers instead of refunds.

READ: Airports could benefit from faster COVID-19 test kits.

Airlines are keen to hang on to the money passengers have paid for tickets as they move to preserve cash to ensure their survival through the coronavirus crisis.

In a joint statement, IATA and A4E said the EU had provided limited help by recognizing cancellations caused by externally imposed measures such as the flight bans or very low demand should be considered as an extraordinary circumstance.

It said this would mean that in most current cases compensation for cancellations would not apply.

But they were unhappy about the European Commission’s response on providing care and assistance and particularly about a specific rejection of the proposal on flexibility on refunds.

They said this meant airlines were potentially responsible for unlimited care to passengers who had been stranded as a result of government decisions to close borders.

“The Commission appears to considerably underestimate the crisis afflicting airlines in Europe. Faced with a cashflow catastrophe, many airlines can only offer vouchers in lieu of immediate cash refunds for canceled flights,’’ said IATA regional vice president Europe Rafael Schvartzman.

“The Commission must accept that this solution – which many people would regard as reasonable in the current extraordinary circumstances – should be facilitated.

“The Commission needs to understand that fiddling at the edges will not keep airlines in any shape to get the economy moving again when the health crisis abates.

“This is not a short-term issue—air connectivity will not be back to normal for many months. And for some airlines, things will never be the same again.”

A4E managing director Thomas Reynaert said the EU guidelines did provide the clarity airlines needed and said Regulation 261 needed to be reviewed before summer.

“Given the extraordinary circumstances and financial pressures our airlines are facing, if this is the Commission’s view—then an emergency amendment to Regulation 261 may be needed, and would be welcomed by the sector,” he said.

 

Qantas and Jetstar suspend international flights, slash workforce

workers unions

Qantas and Jetstar will suspend all scheduled international flights from late March until at least the end of May and stand down two-thirds of their 30,000 employees in response to the latest restrictions on entry into Australia and government advice not to travel.

The restrictions continued Thursday with Tasmania requiring all “non-essential” visitors to self-isolate for 14 days, a move that could see further Qantas reductions and staff furloughs.

The airline blamed the cuts on a huge drop in travel demand triggered by the Australian government’s public health response to the coronavirus.

Qantas chief executive Alan Joyce described it as “terrible times” but said it was about the survival of the national carrier.

He said Qantas would make more adjustments – up or down – if needed.

“I never thought as the CEO I would have to stand down two-thirds of our people and maybe more if this continues this way,” Joyce told reporters in a telephone hook-up.

“But one thing I’m absolutely sure of is that this airline will survive this. One thing I’m absolutely sure of is we’ll get these people back to jobs and get the aircraft back in the air.

“And that’s what we’re endeavoring to do. We’re making drastic and dramatic decisions in order to achieve that. That’s in the best interest of everybody in the long term.

“But these are tough times, they are terrible times, they are the worst times we’ve ever seen in aviation.

“This is the biggest crisis aviation’s ever gone through and Qantas is the best-placed airline around the globe to cope with it and we’ll get through it.”

Qantas urged customers not traveling in the next 48 hours to refrain from calling already overloaded contact centers and said it was automatically converting bookings on canceled flights to a travel credit that could be used anywhere on its network.

READ: Australians told not to travel overseas as Europe shuts doors

The Qantas suspension means that neither major Australian carrier will be flying scheduled international services, although Qantas says it will talk to the government about ad hoc flights to maintain key strategic links.

Employees who are temporarily stood down will take annual, long-service and unpaid leave during the crisis.

The airline will allow early access to long-service leave and leave at half pay and is also allowing employees with low leave balances to access up to four weeks’ leave without earning it.

Senior group management executives and the board have boosted salary cuts from 30 percent to 100 percent until at least the end of the financial year, joining the chief executive and chairman.

Joyce noted the efforts to stop the spread of coronavirus had led to a huge drop in travel demand “the likes of which we have never seen before” and this was having a devastating impact on all airlines.

“We’re in a strong financial position right now, but our wages bill is more than $A4 billion a year,” he said.

“With the huge drop in revenue we’re facing, we have to make difficult decisions to guarantee the future of the national carrier.

“The reality is we’ll have 150 aircraft on the ground and sadly there’s no work for most of our people.

“Rather than lose these highly skilled employees who we’ll need when this crisis passes, we are instead standing down two-thirds of our 30,000 employees until at least the end of May.”

Executives said there had been constructive talks with unions.

Australian and International Pilots Association president Mark Sedgwick said the announcement was disappointing for pilots, crew and staff that would feel the impact of stand-downs.

“AIPA is working closely with its members and the industry to prepare for the reinstatement of flights when the time comes,” he said
“We are committed to continuing to work with Qantas to maintain the new level of services and ensure the long-term viability of the airline to protect pilot jobs.”
But vocal Qantas adversary The Transport Workers’ Union accused the company of trying to wipe the slate clean of all worker entitlements.

“This will set the company up for a massive boost when the crisis is over, which will see shares go through the roof and executives back to massive bonuses,” TWU national secretary Michael Kaine said. “Meanwhile, workers will have lost the benefits that many worked so hard to build up,”

The Flying Kangaroo is also cutting domestic services by 60 percent, mainly through frequency reductions on busy routes such as Melbourne-Sydney, and the grounded aircraft include all Qantas Airbus A380s, Boeing 747s and 787-9s as well as Jetstar’s Boeing 787-8s.

Qantas has vowed to maintain essential domestic, regional and freight connections as much as possible, including to regional centers.

However, it says there will be some domestic route suspensions and new route launches will be postponed.

Its fleet of freighters will continue to be fully utilized and some domestic passenger aircraft will also be used for freight-only flights to replace lost capacity from regularly scheduled services.

The international downturn is also hitting the group’s Jetstar joint ventures with Jetstar Asia suspending all flights from March 23 to at least April 15 as well as both Jetstar Japan and Vietnam’s Jetstar Pacific suspending international and cutting domestic flying.

Joyce said the airline would be talking to partners such as Woolworths about temporary job opportunities for Qantas staff.

“This is a very hard set of circumstances for our people, as it is for lots of parts of the community right now,” he said.

“No airline in the world is immune to this, with the world’s leading carriers making deep cuts to flying schedules and jobs. Our strong balance sheet means we’ve entered this crisis in better shape than most and we’re taking action to make sure we can ride this out.

“Since this crisis started, there has been overwhelming support from our customers. That gives me even more confidence that we’ll get through this.”

The airline said it would contact affected customers by Monday and noted any customers traveling before the end of May who wished to change their booking were eligible to receive a travel credit.

People who booked through a third-party needed to contact the travel agent or website to make changes to their booking, it said.

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