Qantas and Jetstar have announced that two-thirds of their 30,000 employees will be temporarily stood down from late March until at least the end of May.
The group will also suspend all international flights, after the Federal Government told all Australians to avoid international travel.
Qantas said some scheduled international flights would continue until late March to help people return home to Australia.
"As the national carrier, Qantas is in ongoing discussions with the Federal Government about continuation of some strategic links," it said in a statement to the ASX.
More than 150 aircraft have been temporarily grounded, including all of Qantas's A380s, 747s and B787-9s and Jetstar's B787-8s.
"Discussions are progressing with airports and government about parking for these aircraft," Qantas said.
"Essential domestic, regional and freight connections will be maintained as much as possible."
The statement said Qantas's fleet of freighters would "continue to be fully utilised".
"Some domestic passenger aircraft will also be used for freight-only flights to replace lost capacity from regular scheduled services."
The payment of an $A201 million shareholder dividend will be deferred until September.
The airlines had already announced cuts to 90 percent of international flights and about 60 percent of domestic flights on Tuesday.
And on Wednesday, Virgin Australia said it was grounding its international fleet in response to the Covid-19 pandemic.
As the coronavirus disruption hits the aviation industry, Air New Zealand has brought forward the closure of its London cabin crew base affecting 130 flight attendants.
Read more about the Covid-19 coronavirus:
- Self isolation - your questions answered
- Touching your Face: Why do we do it and how to stop
- Coronavirus: Answers to the top five questions
- Scientific hand-washing advice to avoid infection
- More Covid-19 news