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.
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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.
“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.
