Air France-KLM and Qantas warn of major coronavirus profit hits

Edmund Heaphy
·Finance and news reporter
·2 min read
The first Air France airliner's Airbus A350 prepares to take off after a ceremony at the aircraft builder's headquarters in Colomiers near Toulouse, France, September 27, 2019. REUTERS/Regis Duvignau
An Air France at an airport near Toulouse, France. (Reuters/Regis Duvignau)

Two of the world’s largest airlines on Thursday warned that coronavirus-related disruption would have far-reaching effects on their bottom lines, as the aviation industry continues to contend with the outbreak.

Air France-KLM (AF.PA) said that the February to March suspension of its operations in China could cost it between €150m (£125m, $161.9m) and €200m alone.

The group on Thursday became the first major European airline to publish forecasts for 2020.

Like other airlines, Air France-KLM has canceled all flights to mainland China until the end of March, and its forecasts assume that flights will resume at a steady pace beyond that point.

“That’s the hypothesis we’re using for the moment but we don’t know how credible it is,” said chief financial officer Frederic Gagey on Thursday.

“Obviously if it lasts longer, the impact will be heavier.”

Australia’s Qantas (QAN.AX), meanwhile, warned that a 15% reduction in flights to Asia as a result of the outbreak would cost it as much as £77m ($99m).

The airline said it will ground the equivalent of 18 planes and encourage its 30,000 employees to take annual leave as it battles falling demand from Asia. It will also freeze the recruitment of new employees.

Qantas last month suspended its direct flights from Sydney to Beijing and Sydney to Shanghai.

“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 Qantas chief executive Alan Joyce on Thursday.

Joyce noted that the airline had not seen any impact to its other key routes, such as those to the US and UK.

The World Health Organisation said on Wednesday that there are now more than 75,000 confirmed cases of coronavirus across the world. Some 2,000 people have died from the virus, with a huge proportion of those deaths occurring in China.