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Airline cuts latest: American, United and Norwegian scale back

written by Adam Thorn | March 11, 2020

American Airlines was one of a number of airlines to announce major capacity cuts and cancellations in the last 24 hours, as the industry continues to make coronavirus contingency plans.

The world’s largest airline announced it is to reduce international capacity over the summer by 10 per cent, including a 55 per cent reduction in its trans-Pacific capacity. It’s also suspending flights from Philadelphia to Rome, effective immediately through to the end of April.

American chief executive Doug Parker was bullish about his business’ prospects on Tuesday on a call to the JP Morgan transportation conference.

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A file image of American Airlines Boeing 737 MAX 8 N314RH. (Nathan Coats/Commons Wikimedia)
A file image of American Airlines Boeing 737 MAX 8 N314RH. (Nathan Coats/Commons Wikimedia)

“The US airline industry will manage through this and American Airlines will lead the way,” Parker said.

“Our team has built an American Airlines to be able to handle situations like this.

“Not one CEO asked for government financial relief. We do all of this with an eye toward 2021 and with a recognition, we need to be ready when demand returns.”

In other overnight developments:

  • Norwegian Air Shuttle will cancel 3,000 departures between mid-March and June, as well as lay off staff on a temporary basis. The cancellations amount to 15 per cent of its overall capacity.
  • United will cut domestic flights by 10 per cent and international flights by 20 per cent next month with executives reportedly planning “similar reductions” in May.
  • Southwest Airlines CEO Gary Kelly is taking a 10 per cent pay cut.
  • Delta will park planes and cut international capacity by up to 25 per cent, and domestic capacity by 15 per cent. It will also defer $500 million in capital expenditures.
  • Alaska Airlines is reportedly eyeing capacity cuts of 3 per cent in May, but will hold firm during March and April.
  • Virgin Atlantic has retired its three last Airbus A340 jets, effective 9 March.
  • Ryanair has cancelled all flights to Italy until 8 April.

The news comes a day after Australian flagship Qantas announced dramatic cutbacks to its schedule.

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Chief executive Alan Joyce announced he would give up his salary for the remainder of this financial year, as the airline made capacity cuts the equivalent to grounding 38 aircraft.

He said in a dramatic Tuesday morning statement, “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.”

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