Qantas, Air New Zealand to boost domestic capacity as restrictions ease

By Jamie Freed

SYDNEY (Reuters) - Australia's Qantas Airways Ltd <QAN.AX> and Air New Zealand Ltd <AIR.NZ> on Thursday outlined plans for significant boosts to domestic capacity as pandemic-related travel restrictions ease, sending their shares higher.

Qantas said it would lift domestic capacity to 15% of pre-pandemic levels by the end of June, up from 5% now.

The airline said more flights are likely in July depending on travel demand and further opening of state borders, with the ability to increase to up to 40% of pre-crisis capacity by the end of July.

Air New Zealand said it would raise domestic capacity to 55% of normal levels during July and August, up from 20% after a strict nationwide lockdown was lifted in May.

Qantas shares were trading 5% higher at 0240 GMT, while Air New Zealand shares were up 4.8%. Australia and New Zealand have both reported few new COVID-19 cases in recent weeks.

Qantas Chief Executive Alan Joyce said there was pent-up demand for domestic air travel.

"We are already seeing a big increase in customers booking and planning flights in the weeks and months ahead," he said in a statement.

The initial Qantas increase equates to more than 300 return flights a week.

Australia's most populous state, New South Wales, allowed residents to travel for leisure within the state from June 1.

Qantas and low-cost arm Jetstar are adding flights from Sydney to Ballina, near the popular tourist destination of Byron Bay in the state's north, with Jetstar advertising flexible one-way sale fares from A$35 ($24.13).

But Queensland, a favoured destination in the southern hemisphere winter due to its warmer weather, has so far kept it state borders closed.

Joyce said Qantas could ramp up flying quickly in time for the July school holidays if border restrictions eased.

($1 = 1.4507 Australian dollars)

(Reporting by Jamie Freed; Editing by Muralikumar Anantharaman and Christopher Cushing)