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Qantas grounds 90% of international fleet

Qantas set to ground majority of international flights. Source: Getty

UPDATE: Qantas will slash international flights by 90 per cent, equivalent to 150 aircraft, as the government imposes travel restrictions to and from Australia.

The national carrier expects its total international capacity to be cut from the end of March to at least the end of May, up from a 23 per cent fourth quarter reduction announced last week.

Domestic capacity will also be slashed by 60 per cent until at least the end of May.

Qantas flagged that the "precipitous decline" in demand and resulting cuts meant it was confronted with a significant labour surplus.

The company said it was working to manage the impact on its 30,000 workforce as much as possible, including through the use of paid and unpaid leave.

The news follows CEO Alan Joyce’s announcement to staff in an internal memo that the demand for international travel was “evaporating”, with no “indication that demand will return in the short term”, according to the Daily Telegraph.

Joyce reportedly told staff the strict quarantine restrictions would “increase the dramatic decline in international bookings that we’ve already experienced”, and the CEO flagged domestic travel could be hit too.

“We’re now also seeing a substantial drop in domestic travel demand as people begin to retreat from everyday activities,” Joyce stated. “This will have impacts for all of us. There are obviously major hardships ahead that will impact the entire group.”

The airline had already grounded 38 aircraft prior to Prime Minister Scott Morrison’s announcement that all overseas travellers would be required to self-isolate for 14-days upon arrival. These cuts will remain in place from the end of May to mid-September.

They are likely to be increased, depending on demand, which it expects to be subdued for "weeks or possibly months".

Joyce has chosen to forgo his salary until July, after taking home $23.8 million last year.

Travellers cancelling eligible for credit refunds

Travellers flying with either Qantas or Jetstar are eligible for travel credit vouchers if they choose to cancel their flights, the national carrier announced on March 16.

Customers with existing bookings until 31 May 2020 can cancel their flights and redeem a travel credit voucher of the same price, but flyers have until March 31 to process their refunds.

Qantas passengers can redeem their travel voucher for up to 12 months from the original booking, while Jetstar customers have six months to redeem the voucher for travel within 12 months of a new booking date.

Qantas Frequent Flyers who booked classic redemption flights on Qantas, Jetstar and all partner airlines will also be eligible for a voucher, and will have change fees waived.

Global airlines take a massive hit

Qantas isn’t the only airline grounding fleet during the Covid-19 outbreak: German airline Lufthansa grounded two-thirds of its jets, Virgin Atlantic cut four-fifths of its flights, and RyanAir and EasyJet also grounded the majority of their flights.

And without government action, most world airlines could be bankrupt, the Centre for Aviation (CAPA) says.

“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” the CAPA stated.

“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.

“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. 

“Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon.”

While Tourism Minister Simon Birmingham told Sky News that airlines had enough cash reserves to remain viable for now, he didn’t rule out a bailout to stop Qantas and other carriers from going under.

"Not having airlines in Australia is not negotiable, but the airlines at present tell me and assure me they are viable," he said.

- With AAP.

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