Australian carrier Qantas says it will reduce capacity by almost a quarter for the next six months due to fears over the coronavirus, including grounding 38 aircraft, ABC News reports.

The airline said there had been a "sudden and significant drop" in demand for flights and that it must reduce the frequency of flights as well as the size of aircraft.

In a statement, the airline said: "The latest cuts follow the spread of the coronavirus into Europe and North America over the past fortnight, as well as its continued spread through Asia."

As part of the cutbacks Qantas will:

Ground 38 aircraft, including eight A-380s

Re-route services to London, flying via Perth instead of Singapore

Ask staff to take annual leave and unpaid leave

Qantas Chief Executive Alan Joyce said while redundancies were a last resort, the changes meant about 2,000 jobs were now surplus to requirements.

He also said the senior leadership team will take a pay cut of 30 percent, in order to "pull every lever that we can to make sure that the group gets through this environment".

"This will be a survival of the fittest," he said.

Qantas said the biggest reductions would be made to Asian routes, where travel demand is down 30 per cent compared to the same period last year.

Services to the US, UK and New Zealand will also decrease.

Joyce said there had been a "sharp drop" in international bookings over the past fortnight.

"Less flying means less work for our people, but we know coronavirus will pass," he said.

Qantas slashes Asia flights, grounds 38 planes