Coronavirus Will Hit Profits, Warns Qantas And Air France-KLM

The huge outbreak of the coronavirus in China and elsewhere in Asia has dampened demand of Air travel in Asia which has forced airlines to issue warnings of a severe financial impact.

While Air France-KLM estimated that the bit to it because of the coronavirus would be up to €200m, Australia’s Qantas expects a hit of up to A$150m or $99m.

A 15 per cent cut in flights to Asia will be extended by Qantas until the end of May while Air France has announced that its ban on flights to China will continue till at least the end of March.

These warnings come even as other industries too report possible hit of the coronavirus.

After accounting for expenses towards cutting flights, it is estimated that Qantas will take a total hit of 100m -150m Australian dollar hit for the financial year because of the virus outbreak.

“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,” said chief executive Alan Joyce in a statement.

“We’ve also seen some domestic demand weakness emerging, so we’re adjusting Qantas and Jetstar’s capacity in the second half,” he added.

The company plans to put a complete ban on new recruitment and is urging its staff to use up their pending leave in an effort to avoid job losses.

Following the decision of the Australian government to prevent travelers into the country from mainland China, Qantas ended its Sydney to Beijing route earlier than expected, reduced flights to Hong Kong and suspended flights from Sydney to Shanghai.

Between €150m and €200m between February and April would be the hit that Air-France KLM estimates it would have to take because of the coronavirus outbreak, the company said.

All flights to mainland China until the end of March had been cancelled by it, the airline group announced on Thursday. The company expects a steady pace of restarting of flights after that date.

It has been reported that the Chinese government is planning to take control of HNA Group and sell off its airline assets which is another clear sign of the impact of the coronavirus on the aviation industry. According to reports, the coronavirus outbreak has hit the Hainan province severely and to recoup some of it, the government of the province – the headquarters of HNA, is reportedly holding negotiations to acquire the conglomerate.

Direct control or a significant share of a number of carriers, including its flagship Hainan Airlines, ids held by HNA. Reports have suggested that the Chinese state is trying to ease the economic impact of the virus outbreak and the HAN acquisition would be the most dramatic step taken by it yet.

There were no comments available on the issue from HNA and the government of Hainan.

On the other hand, the International Monetary Fund has issued a warning of derailment of an already “highly fragile” world economic recovery of the coronavirus spread massively in countries outside of China.

(Adapted from BBC.com)

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