Qantas shares held remarkably firm on Tuesday despite the airline announcing it was to cut international capacity by 90 per cent earlier in the day.
Shares closed at $2.86, down 5 per cent from Monday’s close of $3.02, but executives will likely be relieved a bigger fall was avoided.
Virgin Australia had its own bad news to deal with, too – yesterday, credit rating agency Standard & Poor’s downgraded the carrier from a ‘B+’ to a ‘B-’, but the news only broke with minutes of trading left.
The carrier will be similarly quietly happy that shares closed at $0.063, down from $0.069 on Monday.
Earlier on Tuesday, Qantas Group announced it would cut 90 per cent of international and 60 per cent of domestic capacity until the end of May.
The reductions will include the grounding of 150 aircraft, almost all the group’s wide-body fleet.
In a sombre message released on Tuesday morning, the airline hinted it was shifting towards helping the national effort to keep the economy moving during the coronavirus crisis, with passenger jets now carrying cargo.
Qantas said, “Despite the deep cuts, the national carrier’s critical role in transporting people and goods on key international [and] domestic routes will be maintained.
“This includes using some domestic passenger aircraft for freight-only flights to replace lost capacity from regular scheduled services. Qantas’ fleet of freighters will continue to be fully utilised.”
The cuts are significantly higher than those announced last week, which the airline said “reflects the demand impact of severe quarantine requirements on people’s ability to travel overseas”.
The news followed another dramatic day of warnings for the aviation industry from various groups.
Airlines for America, a trade body that represents Delta, United and American, has called on the US government to provide an immediate bailout, while the Centre of Aviation (CAPA) warned “most” airlines would be bankrupt by the end of May.
In a statement released on Monday, Airlines for America said the coronavirus crisis “appears to have no end in sight” and urged the government to provide grants, loans and tax relief. It called its impact “staggering”.
“The rapid spread of COVID-19, along with the government and business-imposed restrictions on air travel, are having an unprecedented and debilitating impact on US airlines,” the group said. “Carriers have seen a dramatic decline in demand, which is getting worse by the day.