Australian flag carrier Qantas has warned that the financial impact of the coronavirus outbreak could cost it up to $99 million.
Qantas said the coronavirus outbreak could cost the airline up to 150 million Australian dollars or $99 million as it reduces flights to Asia by 15% until at least the end of May. This was in preparation of a slowdown in the demand for travel in the region.
In order to avoid job cuts, the airline plans to freeze hiring activities as well as ask employees to use up leave.
The Australian carrier forecasts the impact of the outbreak to hit between 100 and 150 million Australian dollars for the financial year once the flight cuts to the region have been accounted for.
In a statement, Qantas chief executive officer (CEO) Alan Joyce said: "Coronavirus resulted in the suspension of our flights to mainland China and we're now seeing some secondary impacts with weaker demand on Hong Kong, Singapore and to a lesser extent Japan."
"We've also seen some domestic demand weakness emerging, so we're adjusting Qantas and Jetstar's capacity in the second half," Joyce added.
Currently, Qantas has suspended flights from Sydney to Shanghai, reduced capacity to Hong Kong and stopped flights on its Sydney to Beijing route earlier than expected after the Australian government imposed restrictions on travelers from mainland China.
Chinese government takes over HNA
In order to dampen the effects of the outbreak on the country's airline industry, the Chinese government is reportedly planning to take control of HNA Group and sell off its airline assets.
Hainan-based HNA is a conglomerate that directly controls or holds stakes in several carriers, including its flagship Hainan Airlines.
While China's President Xi Jinping insists that the country could still meet its 2020 economic growth target despite the outbreak, the International Monetary Fund (IMF) doubts it.
The IMF said: "The coronavirus, a human tragedy, is disrupting economic activity in China as production has been halted and mobility around affected regions limited."
"A wider and more protracted outbreak or lingering uncertainty about contagion could intensify supply chain disruptions and depress confidence more persistently, making the global impact more severe," it added.
