Qantas slashes a third of capacity as omicron sweeps Australia

Qantas Airways Ltd. is cutting domestic and international flight capacity as the omicron coronavirus variant sweeps through Australia and across the globe, reversing an expected pickup in travel. 

Domestic capacity for the fiscal quarter started Jan. 1 is expected to be about 70% of pre-Covid levels, compared to a previous forecast of 102%, the Sydney-based carrier said in a statement Thursday. International capacity is seen falling to around 20% of pre-Covid levels from 30%.

The grimmer outlook is an about-face from just a month ago, when Chief Executive Officer Alan Joyce said he was confident the market recovery was “fundamentally on track” even as omicron started to spread.  

Since then however, case numbers have exploded in Australia. The two most-populous states, New South Wales and Victoria, reported combined cases of almost 130,000 on Thursday. The rapid outbreak has coincided with Australia’s peak summer travel season.

Qantas said an assessment of the financial impact of the changes will be given when it reports first-half earnings in late February, by which time a clearer picture will have emerged on factors such as actual demand level, potential changes to travel restrictions abroad and the response to Western Australia reopening its state border next month.

The statement was released after the close of trading in Sydney. Qantas shares fell 2.4% on Thursday.