In a bid to rein in the spiraling costs associated with the current coronavirus outbreak, Qantas CEO Alan Joyce will take none of his AU$23m ($15.5m) salary for the rest of the year. He is joined by chairman Richard Goyder, and has said that upper management and board members will be taking a pay cut of 30%. This announcement came amid a huge swathe of route cuts from the Aussie airline, representing a 25% capacity cut on international routes, set to last until mid-September.
Joyce to take no salary
Qantas is one of the many airlines working its socks off to try and mitigate the impact of the current coronavirus outbreak. The Australian Airline has, in recent days, taken the decision to ground most of its fleet of A380s, and has even asked Airbus to defer its order of A350-1000s, the projected Project Sunrise plane.
Now, it seems the flying kangaroo is going to even greater measures to get a handle on the current crisis. In fact, as reported today in Australian Aviation, CEO of the airline Alan Joyce is reportedly giving up his AU$28.3m ($15.5m) salary for the rest of the financial year in a bid to ease the financial burden on the carrier.
As well as working for free, the Qantas boss is putting a hold on all management bonuses and has reportedly cut the salaries of all the executives in the company. Commenting on the move, Joyce said,
“We’re in a good position to ride this out, but we need to take steps to maintain this strength. We want to avoid job losses wherever possible. Annual management bonuses have been set to zero and the group executive team will take a significant pay cut.”
Chairman is working for free too
Australian Aviation further reports that Richard Goyder, the airline’s chairman, is also in line to receive no salary at all for the remainder of the financial year. Board members and executive management are taking a pay cut amounting to 30%. Joyce continued,
“The Qantas Group is a strong business in a challenging environment. We have a robust balance sheet, low debt levels and most of our profit comes from the domestic market. When revenue falls, you need to cut costs, and reducing the amount of flying we do is the best way for us to do that.
“Less flying means less work for our people, but we know coronavirus will pass, and we want to avoid job losses wherever possible. We’re asking our people to use their paid leave and, if they can, consider taking some unpaid leave given we’re flying a lot less.
“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. But we know it will pass, and we’ll be well-positioned to take advantage of opportunities when it does.”
Huge route and capacity cuts
The airline is not just punishing its high-level workers in order to save money. In a bid to get a grip on the stagnant travel market, Qantas has announced a raft of route and capacity cuts. The cuts represent 25% of the airline’s international routes, with cuts scheduled to last until September.
The biggest losers include Asia, which is down 31% year on year, the USA which is down 19% and the UK, down 17%. Qantas also said that it will aim to swap out large aircraft like its A380s for smaller planes, thereby reducing capacity, in favor of dropping the route altogether where possible.
In a bid to avoid the Asian region, the existing QF1 and QF2 flight which usually travels from Sydney via Singapore to London will be rerouted to Sydney-Perth-London. This change will take effect from the 20th April.
The airline’s new route between Brisbane and Chicago was due to start in April, but will now be pushed back to mid-September. In the domestic market, Qantas’ cuts run less deep, with capacity reduced by just 5% through to September 2020. Subsidiary JetStar is also facing significant cuts to its network, including suspension of flights to Bangkok and a reduction in services to Vietnam and Japan by nearly 50%.
In the hours following the announcement, shares in Qantas dropped more than 11%. In the last four weeks, Qantas has lost AU$1.27bn ($830k) in company value.