Qantas shares bounce, virus woes to linger

Qantas shares have rebounded in step with the broader market but are still some way from December's altitude after a fresh round of coronavirus-related flight cuts.

Shares in the airline were trading 5.3 per cent higher at $4.37 by 1402 AEDT on Tuesday in a topsy-turvey trading day where they first fell to a near three-year low before bouncing back.

Qantas earlier on Tuesday said it has slashed the capacity of its international flights by almost a quarter for the next six months due to the coronavirus impact.

The decision means 38 planes will be grounded.

President Donald Trump's announcement of a stimulus to help the US economy overcome coronavirus impact lifted investor spirits after a dismal morning on the ASX.

Qantas shares had fallen to a near three-year low of $3.85 due to coronavirus fears and an oil price war.

While most share prices have increased since Mr Trump's announcement, Qantas shareholders may be longing for better times.

In December, shares in the airline reached an all-time high of $7.40 amid a wider upswing across the market.

The airline on Tuesday announced there would be fewer Qantas and Jetstar flights, and smaller planes, travelling to Asia, the US, the UK and New Zealand, until mid-September as fewer people want to fly.

The changes reduce capacity by 23 per cent compared to the same period last year.

Flights to Asia are most affected. Capacity for this continent will be reduced by 31 per cent.

The US is the next-most affected destination - a 19 per cent cut.

Qantas will contact affected customers and offer alternative flights.

Chief executive Alan Joyce said there had been a sharp drop in bookings over the last fortnight for international flights.

He said the business was trying to reduce costs while giving certainty to customers.

The reduced flight schedule means more than 2,000 workers will not be needed.

To avoid redundancies, staff will be asked to take leave.

Mr Joyce said Qantas was in a good position to overcome financial impact.

"We'll be trying to pull every lever that we can to make sure that the group gets through this," he said.

Airlines across the world have cancelled many flights. Tourists have delayed travel, and some countries such as Australia have banned people arriving from nations highly-affected by the virus.

Qantas has reduced domestic flight capacity by five per cent.

Mr Joyce will not take a salary for the remainder of the financial year as the airline tries to limit costs.

His peers will accept similar reductions.

Chairman Richard Goyder will take no fees.

Group executive management will take a 30 per cent pay cut and board members will accept a 30 per cent reduction in fees.

Management will not receive bonuses, and non-essential recruitment and consulting has been postponed.

Mr Joyce said he expected lower demand to continue for the next several months.

He said the business will record a loss for its last quarter.

The board has cancelled an off-market share buyback, which was announced in February.

Austrlaian Associated PressBack to Breaking News

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