News: QAN UPDATE 1-Qantas to cut more domestic capacity after W. Australia delays border opening

• Q3 domestic capacity to be 60% of pre-pandemic levels
• Represents a fall from 70% outlook provided last week
• Recent staff recall will squeeze margins

(Adds Qantas details, Virgin Australia comment)

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

The opening planned for Feb. 5, was cancelled https://www.reuters.com/world/western-australia-state-stay-shut-omicron-stalks-east-2022-01-20 late on Thursday, with authorities in Western Australia citing health risks from a surge in the Omicron variant of coronavirus in eastern states.

In a statement, Qantas said, "The group retains the flexibility to adjust flying levels depending on demand and clarity on border re-opening in the weeks and months ahead."

Last week, the airline had pared about a third of planned domestic and international capacity in the March quarter, to better match demand amid rising COVID-19 infections.

Preparing for a surge in demand, it had recently recalled about 11,000 staff who had been idled without pay during the pandemic.

The move increased fixed costs and the recent capacity cuts will squeeze revenue and reduce margins.

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

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