The Qantas Airways Limited (ASX: QAN) share price will be on watch again on Thursday after releasing a further update on the impact of the coronavirus on the airline, its customers, and its shareholders.
What did Qantas announce?
Further to its capacity reduction announcement earlier this week, this morning Qantas outlined the impact of its coronavirus-related network cuts.
According to the release, more than 150 aircraft will be temporarily grounded, including all of Qantas' A380s, 747s, and B787-9s and Jetstar's B787-8s. Discussions are progressing with airports such as Sydney Airport Holdings Pty Ltd (ASX: SYD) and the government in relation to the parking of these aircraft.
Essential domestic, regional, and freight connections will be maintained as much as possible. Qantas' fleet of freighters will continue to be fully utilised. Some domestic passenger aircraft will also be used for freight-only flights to replace lost capacity from regular scheduled services.
International flight changes.
Qantas advised that regularly scheduled Qantas and Jetstar international flights from Australia will be suspended from the end of March until at least the end of May 2020.
Some flights may continue in order to maintain key links, based on ongoing discussions with the Federal Government.
Jetstar Asia (Singapore) will suspend all flights from March 23 to at least April 15, Jetstar Japan has suspended international flights and cut domestic flying, and Jetstar Pacific (Vietnam) has suspended international flights and will significantly cut domestic flying.
Dividend payment deferred.
Given the extraordinary circumstances that the company is facing, it has decided to defer the payment of its interim dividend from April 9 until September 1.
This is in addition to the cancellation of the off-market buy back, which was previously announced.
Management commentary.
Qantas Group CEO Alan Joyce explained that these difficult decisions were made in order to protect the future of the airline.
He said: "The efforts to contain the spread of Coronavirus have led to a huge drop in travel demand, the likes of which we have never seen before. This is having a devastating impact on all airlines. We're in a strong financial position right now, but our wages bill is more than $4 billion a year. 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."
Mr Joyce revealed that Qantas is looking for support from partners such as Woolworths Group Ltd (ASX: WOW) for its staff.
"Most of our people will be using various types of paid leave during this time, and we'll have a number of support options in place. We're also talking to our partners like Woolworths about temporary job opportunities for our people," he added.
He concluded: "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."
