The CEO and chairman of Australia’s Qantas airline will take no fees and salaries for the rest of the current financial year in a bid to avoid redundancies amid the coronavirus outbreak. The airline announced it would slash its international capacity by nearly 25 per cent over the next six months.
Alan Joyce, the airline’s chief executive, on March 10 announced the cuts as part of sweeping changes in response to a coronavirus-led plunge in passenger demand. In addition to salary cuts, the management team will receive no bonuses, and all staff are being encouraged to take paid or unpaid leave.
On Tuesday the Australian airline said it is delaying an order for Airbus A350 planes and also cancelling plans for an A$150 million ($98.73 million) off-market share buyback to preserve cash.
“We are using every lever we can to avoid redundancies,” Joyce told reporters in Sydney on Tuesday. “We think we can do that into September with these cuts.”
In the 2018 financial year, Joyce had a realised pay of AU $23.88 million ($15 million), according to The Australian Council of Superannuation Investors (ACSI).
As travel demand has weakened, Qantas said it would remove 31 per cent of capacity from Asia, 19 per cent of capacity from North America, 17 per cent from the UK and 10 per cent from trans-Tasman routes, according to a news release.
The carrier said it would use smaller aircraft and slash its international capacity instead of abandoning routes altogether. It will also ground eight of its 12 biggest aircraft—the A380—leaving just two in operation for the period. Two others are in maintenance.
It had been expecting to place an order for up to 12 A350-1000 planes capable of the world’s longest flights from Sydney to London by the end of the month.
Qantas said it could no longer provide guidance on the financial impact of the coronavirus. At the time of its half-year results on Feb. 20, it had estimated an A$100 million to A$150 million hit to underlying earnings before interest and tax this financial year.
“When revenue falls you need to cut costs and reducing the amount of flying we do is the best way to do that,” Joyce said in a statement. “Less flying means less work for our people, but we know coronavirus will pass, and we want to avoid job losses where possible.”
“It’s hard to predict how long this situation will last, which is why we’re moving now to make sure we remain well-positioned,” he added. “But we know it will pass, and we’ll be well-positioned to take advantage of opportunities when it does.”
The news came just days after Britain’s Flybe collapsed after a plunge in travel demand, making it one of the first significant corporate casualties of the coronavirus outbreak.
Reuters contributed to this report.