Qantas and Jetstar are cutting back flights to Asia and regional destinations for the next 3 months as demand declines amid the coronavirus outbreak. Flights to China, Hong Kong and Singapore will be affected. The overall reduction of around 16% will last “until at least the end of May”, says Qantas. The airline had been planning to suspend its Sydney-Shanghai route only until the end of March, but will now further defer resumption of the service. On the Melbourne-Singapore route, capacity will be reduced by around 250 seats per flight as the airline deploys Boeing 787s to replace Airbus A380s. Frequencies to Hong Kong will be cut from 4 times per day to 16 times per week. Flights between Australia and New Zealand will be reduced 6%. <br/>
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Qantas saw its half-year underlying profit before tax come in flat at A$771m (US$512m), with higher revenues helping to offset external headwinds. Group revenue for the first half of its 2020 fiscal year, which ended Dec 31, rose 3% to $9.46b. A 3% climb in passenger revenue helped the carrier to offset a 6% decline in cargo revenue. The increase in group revenue was notable, despite what the carrier calls “temporary headwinds” from the protests in Hong Kong, weaker freight demand from the US-China trade war, increases in non-fuel costs due to foreign exchange, and a loss of earnings from the sale of its domestic terminals to airport operators. The airline also saw its statutory net profit declining 4% to $445m. <br/>
Qantas Airways continues to evaluate a number of aircraft types, including new narrowbodies as well as Boeing’s proposed New Mid-Market Airplane. A slide accompanying the airline’s first half results presentation outlines the airline’s thinking in regard to fleet, dividing aircraft types into 4 categories: exit fading technology, mainstream fleet (fit for purpose), adapting next generation technology, and evaluating future technology. The existing fleet mix largely offers the “right aircraft right route,” but Qantas sees future aircraft as path to “enhanced competitive advantage”. The chart indicates that the airline is largely satisfied with its international fleet widebody fleet. The airline’s 6 remaining Boeing 747-400s will see an accelerated replacement in 2020 by the smaller, but far more efficient, 787-9. <br/>