SOLUTION: MIT International Airline Business Continuity Plan with Outbreak of COVID 19 Essay

Create a Summary Business Continuity Plan (BCP)
1.5 – 2 pages long for business in one of the industries below – Your tutor will choose
the industry for your group.
International Airline
Qantas
Business Continuity Plan:
Link: https://www.business.qld.gov.au/running-business/protecting-business/riskmanagement/continuity-planning/plan
Introduction + Scenario – John
With the serious outbreak of COVID-19 in the last year, there have been
tremendous impacts on the airline industry, with significant declines in total
revenues due to collapsed customer sales. The airline industry has seen major
declines in flight frequency and number of passengers, reaching a global peak
of 62.9% decrease in flights in June 2020 (Statista, 2020). More specifically,
international airline Qantas has seen passenger numbers drop to just 40.48
million this year, as opposed to 2019 where they reached 55.81 million (Statista,
2020). Qantas’ Business Continuity Plan (BCP) will provide information on the
effective actions, procedures and policies necessary to ensure that sound
business operations continue and customer satisfaction is upheld throughout
and after the impacts of the current global pandemic.
Risk Management Plan with business impact (How has COVID impacted
the business) – Ruoman
It is true that risk management plays a significant role in an airline industry. Both
social and internal factors affect the risk management of the aviation industry, such as
fluctuations in currency exchange rates, volatility in passenger demand and
competition from low-cost carriers (Pyke & Sibdari, 2018). Apparently, as a special
factor, COVID-19 pandemic indeed has adverse impacts on both staff and
organisation’s economy of Qantas. On the one hand, Covid-19 pandemic has
‘Devastating’ effects, which mainly reflected in the fact that Qantas has experienced
an extreme financial loss of A$2.7 billion and a mass unemployment of approximate
6,000 workers (Davies, 2020). In addition, some international flights of Qantas have
also been suspended owing to the pandemic. The continuous reduction of Qantas’
finance becomes an unexpected risk that may lead to a worse loss even a bankruptcy
of Qantas. Thus, the preventive ‘rainy day’ fund is necessary for those unforeseen
circumstances. On the other hand, Qantas has applied an integrated security
management system to risk criteria including working health and safety (Qantas,
2020). However, six Qantas staff were quarantined after being tested positive (Eddie
& Gorrey, 2020). During the period, risks management is imperative, and the crisis
management systems should be functioned to respond to the emergency. The board is
required to put the staff first and may sacrifice the chairman’s salary if necessary.
Incident response plan – Iain
Back in 2016 within the Corporate Governance Statement, Qantas outlined a
series of risks that could in turn affect the operating performance of the
business and included on the list is “natural disasters or the rapid spread of
contagious illness, placing restrictions on aviation operations” which is exactly
what occurred during the COVID-19 pandemic (Qantas, 2016). Such
governmental restrictions and the general loss of travel desire from the public
has brought Airline operations to a halt across the globe and Qantas is no
exception, leading to operating losses and cash flow problems that threaten
the bottom line of Qantas’ survivability. This required the grounding of a
majority of Qantas operated planes and the subsequent redundancy of over
6000 staff from the loss of revenue and 100 aircraft grounded for a period of
at least 12 months and 12 A380s being sent to storage for 3 years (Butler,
2020). In order for Qantas to survive through the crisis, the operating costs
and expenses must be brought to an absolute minimum in order to prevent
continued hemorrhaging of funds. There has been a reduction in costs tot the
sum of $15 billion expected across 3 years and a $1.9 billion equity raising
plan in order to restore liquidity into the airline as a means of ensuring
continued operability and ability to pay suppliers and employees (Qantas
News Room, 2020).
Recovery plan (after COVID)- Andrea
Qantas’ recovery plan post COVID-19 is implemented in a way that provides a
pathway to achieve it’s key goals such as regaining market share within the
airline industry, maximising profit potential, increasing value to shareholders
and retaining the jobs of their most valuable and skillful employees. In the
next three year period, Qantas are targeting a reduction of $15 Billion in costs
and holding off the use of 100 aircrafts to minimise its associated operating
expenses (Qantas news room, 2020). Along with lowering and making
modifications to it’s issued share prices, Qantas are also standing down an
estimated 20,000 employees in order to manage its budget with the
decreased demand for international flying (ZDNet, 2020). To combat the
economic loss suffered during the pandemic, Qantas are seeking to
recapitalise by raising as much equity as possible through their share
purchase plan to improve their financial resilience and accelerate recovery.
This restructuring of Qantas’ business model and structure will take several
years of adapting before they experience the success that was achieved
before the crisis.
Evaluation of the plan/ recommendation to improve – Tong


Challenges COVID 19
recommendation
References
References
Butler, B., 2020. Qantas To Cut 6,000 Jobs And Keep 15,000 Stood Down In Bid
To Survive Coronavirus Downturn. [online] the Guardian. Available at:

[Accessed 28 October 2020].
Chanthadavong, A., 2020. Qantas Focuses On Three-Year Recovery Plan As
FY20 Net Profit Plunges 91% | Zdnet. [online] ZDNet. Available at:
[Accessed 28 October 2020].
Qantas News Room, 2020. QANTAS GROUP ANNOUNCES POST-COVID
RECOVERY PLAN AND EQUITY RAISING FOR A STRONGER FUTURE. [online]
Qantas News Room. Available at:

[Accessed 28 October 2020].
Qantas, 2016. QANTAS CORPORATE GOVERNANCE STATEMENT 2016.
[online] Qantas.com.au. Available at:
[Accessed 28 October 2020].
Statista. 2020. Australia – Total Number Of Passengers Carried By Qantas 2020
| Statista. [online] Available at:
[Accessed 28 October 2020].
Statista. 2020. COVID-19 Impact On Flight Frequency Of Global Airlines 2020 |
Statista. [online] Available at:
[Accessed 28 October 2020].
Pyke, D., & Sibdari, S. (2018). Risk Management in the Airline Industry. Journal
of Finance and Risk Management for International Logistics and the Supply
Chain, pp.293-315.
Davies, P. (2020). ‘Devastating’ impact of Covid-19 hits Qantas. Travel Weekly.
Retrieved from [Assessed 26 October 2020]
Qantas. (2020). Our governance: Risk management. Qantas. Retrieved from
[Assessed 27 October 2020]
Eddie, R., & Gorrey, M. (2020). Six Qantas baggage handlers test positive to
coronavirus. The Sydney Morning Herald. Retrieved from
[Assessed 27 October 2020]
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