Qantas accelerates cost cuts as $1.5bn loss looms

Qantas has announced new cost-cutting measures to help it deal with the impact of the coronavirus pandemic.

The Australian carrier also said it would report an annual loss before tax of more than $1.5bn (A$2bn, £1.1bn). But it added that its debt pile had peaked and was likely to fall as domestic travel was on track to hit pre-pandemic levels.

Qantas said its international division was losing about $2.3m a week, down from $3.9m last month. Its latest cost-cutting plans include a two-year wage freeze, slashing travel agents’ commissions for international flights and offering voluntary redundancies to cabin crew in its international business.

Separately on Wednesday, the parent company of rival Singapore Airlines revealed a record annual loss of S$4.27bn ($3.2bn) – worse than the average S$3.27bn forecast predicted by eight analysts, said a Reuters report.

In a statement on Tuesday, Qantas said it sees more positive times ahead as a rebound in domestic travel to near-normal levels would help it to continue to cut its debts.

“The fact we’re making inroads to the debt we needed to get through this crisis shows the business is now on a more sustainable footing,” Qantas Chief Executive Alan Joyce said in a statement.

“The main driver is the rebound of domestic travel, which now looks like it will be bigger than it was pre-COVID, at least until international borders re-open.”

Qantas added that its international division was losing about $2.3m a week, down from $3.9m last month, due to the opening of a travel bubble with New Zealand and robust demand for its cargo services.

The airline has pushed back the sale of international tickets, with the exception of New Zealand, to December after the Australian government said it was unlikely to open its borders to widespread travel until the middle of next year.

Qantas shares on the Sydney Stock Exchange rose after today’s announcement. Separately on Wednesday, the owner of Singapore’s national airline revealed the biggest loss in its 74-year history.

The $3.2bn loss was far bigger than last year’s $159m loss, the first time the company had ever fallen into the red.

The firm also announced a $4.65bn bond sale to help to bolster its finances in the face of the Covid-19 crisis.

Singapore Airlines, which has no domestic market, has been one of the world’s hardest hit carriers during the pandemic, alongside its Hong Kong-based rival Cathay Pacific.

On Monday, a planned travel bubble between Hong Kong and Singapore was postponed for a second time after a spike in cases in Singapore.

Source: bbc.com