Qantas cuts domestic flights as COVID - 19 infections rise

A ground worker walks near a Qantas plane at Sydney Airport as countries react to the new coronavirus Omicron variant amid the coronaviruses disease COVID - 19 pandemic, in Sydney, Australia, November 29, 2021. REUTERS Loren Elliott

SYDNEY, January 21, Reuters -- Qantas Airways Ltd. QAN.AX will reduce domestic capacity by 10 more percentage points, to 60% of pre-pandemic levels, in the March quarter, after the state of Western Australia delayed opening its border, the carrier said on Friday.

The opening planned for Feb. 5, was cancelled on Thursday, with authorities in Western Australia citing health risks due to a surge in the Omicron variant of coronaviruses in eastern states.

Qantas said in a statement that the group has the freedom to adjust flying levels based on demand and clarity on border re-opening in the weeks and months ahead. The airline had reduced a third of its planned domestic and international capacity in the March quarter to better match demand amid rising COVID- 19 infections.

It had recently recalled 11,000 staff who had been idled without pay during the epidemic, a move that it had been anticipating for a surge in demand.

The recent capacity cuts and the increase in fixed costs will squeeze revenue and reduce margins.

Qantas said it would give more details on the impact of changes in half-year results late next month, as it ends its financial year in June.

Rival Virgin Australia said it would review its flight schedule to Western Australia in order to keep in line with the state's arrangements to re-open its borders.