Qantas announced on Tuesday a market update and the company’s plan to increase resilience as they prepare for a long-term recovery. The carrier has secured an additional $550 million in debt funding and continues to reduce their cash burn rate.
Yesterday (May 5, 2020), Qantas announced a market update and additional steps the carrier is taking to increase resilience and prepare for a long-term recovery. The airline has secured an additional $550 million in funding against three wholly owned Boeing 787-9 aircraft. Qantas previously raised $1.05 billion in March against seven 787-9 Dreamliners. The company has extended flight cancellations from the end of May until the end of July but will increase some domestic and Trans-Tasman capacity as travel restrictions are eased. In Tuesday’s announcement, Qantas Group’s CEO Alan Joyce said in part,
“Our cash balance shows that we’re in a very strong position, which under the circumstances we absolutely have to be. We don’t know how long domestic and international travel restrictions will last or what demand will look like as they’re gradually lifted. Our ability to withstand this crisis and its aftermath is only possible because we’re tapping into a balance sheet that has taken years to build. Australia has done an amazing job of flattening the curve and we’re optimistic that domestic travel will start returning earlier than first thought, but we clearly won’t be back to pre-coronavirus levels anytime soon. With the possible exception of New Zealand, international travel demand could take years to return to what it was.”
The Qantas Group currently carries a net debt of $5.8 billion but the company doesn’t have any significant debt maturities until June 2021. The Group has enough liquidity, even if current conditions persist, through at least December 2021 and has $2.7 billion in unencumbered aircraft assets, should further funding be required. Qantas acted quickly to reduce cash burn at the start of the crisis through employee stand downs, a pause on virtually all CAPEX and revising agreements with key suppliers. The Group expects to reach a net weekly cash burn rate of $40 million by the end of June 2020. At the close of business on May 4, 2020 the Qantas had total short-term liquidity of $3.5 billion, including a $1 billion undrawn credit facility.
Source: Qantas