SYDNEY, 18 January 2022: Qantas and Jetstar are adjusting
flying levels to better match travel demand in light of the sudden growth in
Covid-19 cases.

The Qantas Group now expects domestic capacity for the third quarter of FY22 (January to March) to be at around 70% of pre-Covid levels, down from the 102% that had been planned.

The schedule changes are focused on reducing flights and
aircraft size. The group’s total international capacity for the same period
will fall from 30% to around 20% of pre-Covid levels. This reduction is driven
by increased travel restrictions in countries like Japan, Thailand and
Indonesia and is mostly impacting Jetstar’s leisure routes. Other markets –
such as London, Los Angeles, Vancouver, Johannesburg and India – continue to
perform well.

Customers will be contacted directly from late January if
their booking is impacted by cancellations and offered alternative flights
that, in most cases, are likely to be a difference of a few hours if travelling

An assessment on the financial impact of these changes will
be given at the group’s half-year results in late February, by which time a
clearer picture will have emerged on swing factors such as actual demand
levels; potential loosening or tightening of travel restrictions in countries
overseas; and consumer response to the reopening of Western Australia next
month. No material adjustments have been made to capacity expectations for Q4
FY22 (April to June).

Qantas Group CEO Alan Joyce said: “The sudden uptick in
Covid-19 cases is having a noticeable impact on consumer behaviour across
various sectors, including travel, but we know it’s temporary.

“Thankfully, Australia has one of the world’s highest
vaccination rates, and the Omicron variant is milder than its predecessors. So,
as challenging as this current phase is, we’re optimistic that it is likely to
fast track a return to normal.

“People are already looking beyond what’s happening now with
early bookings for the Easter holidays in April looking promising for both
domestic and international.

“We have the flexibility to add capacity back if demand
improves earlier than expected, but 70% still represents a lot of domestic
flying, and it’s a quantum improvement on the levels we faced only a few months

“Our focus on positive cash flying remains,
notwithstanding some of the costs that we’ll have to absorb from this sudden
drop in demand.

Customers will be contacted directly by Qantas or their
travel agent from late January if their booking has been impacted by flight