Impact of Covid-19 on Qantas Airway Limited

This study analyzes the effects of Covid-19 on Qantas Airway Limited, including its performance, revenue, and functions. It also discusses the Stolper-Samuelson theorem and the relationship between relative prices of output.

Impact of Covid-19 on
Qantas Airway
Limited

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Analysis of effects of Covid-19 on Qantas airway limited..........................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................6

INTRODUCTION
International trade can be defined as exchange of goods, services, technology and others across
international borders (McGovern, 2018). There are several advantages of international trade like
import, export of goods or exchange of products between countries as it increases revenue,
benefit from currency exchange and others. This present study is based on Qantas Airway
limited which is the flag carrier and the largest airline of Australia by feet size. It was founded by
Winton in the year of 1921. This present study is going to show some critical effects of Covid-19
or climate change on performance, revenue and functions of this company. It will also discuss
Stolper–Samuelson theorem which helps in identifying relationship between relative prices of
output.
MAIN BODY
Analysis of effects of Covid-19 on Qantas airway limited
In the context of business environment it can be said that it is made of internal and external
factors which affect performance of the company in a critical manner. Climate change,
environmental factors or Covid-19 is one of them which have affected many of companies in a
negative manner. In the context of Australia’s national carrier it is found that due to this
pandemic there was a collapse in global air travel which had devastated revenues. It is also stated
by the government that all international flights will be cancelled and affected until October and it
is a huge loss for this company (Eroğlu, 2020).
Australia is one of the countries who got affected the most and faster than other countries of
Virus and due to this many of the people have lost their lives. In the context of Airline it is stated
that it is one of the industry to whom virus drives to worst year of records. People who worked in
this industry had to lose their jobs and it is stated that Qantas cuts around 6,000 jobs due to
Covid-19 and revenue losses (Qantas cuts 6,000 jobs over Covid Impact, 2020). But on the other
hand, domestic flights are beginning to pick up as most Australian regions have successfully
contained this situation. In the context of loss it is also found that there is an annual loss of
around £1 billion to Qantas Airway Ltd. For making their position in the market and coping up to
the situation it CEO of this airline carrier announced to finalize 4000 of its 6,000 planned job
3

cuts by the end of September. It has forecasted about upcoming financial years and said that
revenue will fall around A$10bn and it will affect 2021.
Figure 1: Share of global passenger traffic
Sources: (Plane Sailing, 2020)
From the above data it can be said that Qantas is one of the effective and unusually dominant
player and one of the benefit which it can have is keeping fixed cost high. By making effective
strategies, Qantas expected to save around A$8.2 billion over the coming 12 months amounts to
about ½ of typical annual cost. So, it can be said that Covid-19 has affected it in a negative
manner bit still it can get a good chance of returning to resembling normal domestic aviation
traffic.
Australia's premier airline has posted out to have a loss of $1.97 billion as the most challenging
period in its long history. As per the current trends, it has been noticed to have a steep plunge of
about 91 % in the financial year results declared in august. In addition to that, the firm has
4

confirmed the loss of at least 6000 permanent jobs due to the ongoing financial blows of the
pandemic coronavirus.
Australia's largest shareholding aviation company has totally collapsed. The firm is holding the
statutory loss representing the 333.8% slump as compared to the year 2019 along with
predominantly causing %1.4 billion written down its value of assets. The devaluation has major
inclusion of A3800 along with reunites cost for about $600 million (Qantas profits plunge 91 per
cent due to coronavirus. 2020.). The airline is expecting to have a contraction of Virgin
Australia by ditching its low-cost carrier Tigerair. This will result in the intimal level of growth
of domestic market share from 60 to 70 %. This decision will be helping out the company to
have significant dealing form travels, demand weakness and structural change in overhead.
The impact of COVID 19, the flights have got the suspensions to mainland China along with
having weaker demand in Hong Kong, Singapore and other routes such as US and UK.
importantly companies are retaining the flexibility to respond to situations if the market
improves or gets worse (He, Pan and Tanaka, 2020). On the other hand, the ray of hope is
generated form the downfall in the prices of the oil over the last few months benefiting the
airline. In addition, the company has not expected the material financial impacts from the
widespread bushfires in Australia which have severely hit the local tourism economy.
As per the Heckscher-Ohlin theory, in economics of international state as stated as the country
who is relatively plentiful in capitals relatively scarce in labour will tend to have the capital-
intensive products and will begin importing the labour-intensive products and vice versa have
happened. This can be similarly seen in the case of the COVID 19 impact as cargo in Australia is
least glamorous in the flying but has been proven as a ray of light for the airlines amid in COVID
19 gloom.
The grounding of the passenger planes at this time have increased the demand for everything
from medical suppliers to the iPhone and have boosted the rate of freight. The house bond
population and shopping online as population hitting mails as holiday season have approached.
For Qantas airways, the epical freight out for china hit its peak in the month of June and may.
There has been huge uglifying of lights but bulky freight consistent with masks and gowns and
gloves (Maneenop and Kotcharin, 2020). Hence, this can be stated as Airlines in general have
become the lifeline for the world, and airlines with strong strategies and agility have been able to
sustain themselves most easily.
5

CONCLUSION
From the above file, it can be concluded as Australia is one of the countries who got affected the
most and faster than other countries of Virus. Qantas expected to save around A$8.2 billion over
the coming 12 months amounts to about ½ of typical annual cost. The impact of COVID 19, the
flights have got the suspensions to mainland China along with having weaker demand in Hong
Kong, Singapore and other routes such as US and UK.
REFERENCES
Books and Journals
Online
McGovern, E., 2018. International trade regulation (Vol. 1). Globefield Press.
Eroğlu, H., 2020. Effects of Covid-19 outbreak on environment and renewable energy
sector. Environment, Development and Sustainability, pp.1-9.
He, G., Pan, Y. and Tanaka, T., 2020. The short-term impacts of COVID-19 lockdown on urban
air pollution in China. Nature Sustainability, pp.1-7.
Maneenop, S. and Kotcharin, S., 2020. The impacts of COVID-19 on the global airline industry:
An event study approach. Journal of Air Transport Management, p.101920.
Online
Qantas cuts 6,000 jobs over Covid Impact. 2020. [ONLINE] Available thought: <
https://www.asiatimesfinancial.com/qantas-cuts-6-000-jobs-over-covid-impact>
Plane Sailing. 2020. [ONLINE] Available though: <
https://www.bloombergquint.com/gadfly/qantas-s-domestic-dominance-means-it-could-
benefit-from-covid>
Qantas profits plunge 91 per cent due to coronavirus. 2020. [ONLINE] Available though:
6

< https://www.news.com.au/travel/travel-updates/qantas-set-to-cut-at-least-6000-jobs-as-
pandemic-costs-airline-billions/news-story/c01224f6f00eefd8085299e60eb34b04>
7

8

9