Qantas (QF, Sydney Kingsford Smith) has announced that as a part of its newly-devised post-COVID recovery strategy, effectively immediately, it has retired all remaining B747-400ERs, grounded up to 100 additional aircraft for up to more than a year, and deferred deliveries of A321-200neo and B787-9s.
"The plan has three immediate actions to safeguard the national carrier’s future - and, the majority of jobs it supports. The first is to rightsize our workforce, fleet and capital spending for a world that has less flying for an extended period. The second is restructuring to deliver ongoing savings across the Group's operations in a changed market. And the third is recapitalising through an equity raise that will strengthen our balance sheet and accelerate our recovery," Qantas Group Chief Executive Alan Joyce said.
Although the airline did not reveal how many aircraft of which type would remain grounded, it did specify that its twelve A380-800s will "be idle for the foreseeable future, which represents a significant percentage of their remaining useful life," due to anticipated lower levels of demand.
Qantas said that it would fly around 40% of its pre-COVID domestic capacity in July and hoped to increase this level in the coming months. However, the Australian government recently said that the country's external borders could remain closed - with some exceptions - through the end of 2020, dashing Qantas's hopes of an international rebound.
The Australian airline said that while it entered the crisis "in better shape than most", it would still seek additional capital from the market. It plans to raise up to AUD1.9 billion Australian dollars (USD1.3 billion) via a AUD1.436 billion fully underwritten institutional placement and an up to AUD500 million (USD343.6 million) non-underwritten share purchase plan. Following the completion of the underwritten institutional placement, but excluding proceeds from the share purchase plan, the carrier's liquidity will increase to AUD4.6 billion (USD3.16 billion).
The newly issued shares will increase the total number of Qantas shares in circulation by 25%. The issue will be priced at AUD3.65 (USD2.51) per share, 12.9% below its last trading price before the plan was announced.
The carrier's plan also includes a host of cost-cutting measures which target making AUD15 billion (USD10.3 billion) in savings over the next three years. These measures include permanent lay-offs affecting 6,000 staff across all parts of its business and the extension of furloughs affecting 15,000 staff, particularly those involved in Qantas' international operations.
The lay-offs will affect predominantly ground operations (1,500 staff sacked), non-operational positions (1,450), and cabin crew (1,050).
"[These are] people for whom we have no work now, but will in future. Around half of those stood down will be back flying domestically - we think - by the end of the year. The remainder - mostly, those supporting international flying - will return more slowly," Joyce said.
The airline also announced that, at the board's request, Joyce will stay as Group CEO until at least June 2023 to "provide the leadership, experience and stability required as the Group navigates this incredibly challenging period."
