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Qantas shares soar on financing deal as rivals cut more capacity
[SYDNEY] Qantas Airways on Wednesday secured A$1.05 billion (S$910 million) against its aircraft fleet to help it ride out the coronavirus crisis, sending shares up 30 per cent, as airlines in the Asia-Pacific region took the knife to capacity and jobs.
The Qantas financing of seven Boeing Co 787-9s for up to 10 years at a 2.75 per cent interest rate showed there is still low-cost funding available to airlines with strong fundamentals, even as the global industry calls for more government aid to help replace an estimated US$250 billion of lost revenue in 2020.
"Over the past few years we've significantly strengthened our balance sheet and we're now able to draw on that strength under what are exceptional circumstances," Qantas chief executive Alan Joyce said in a statement.
Qantas has cut all international flights and put two-thirds of its 30,000 staff on leave but so far has maintained its investment grade credit rating.
It is continuing with a costly programme to upgrade the interior of its grounded Airbus SE A380 super-jumbos, in an expression of confidence demand will eventually return to normal.
Cash-strapped rival Virgin Australia Holdings said on Wednesday it would stop 90 per cent of its domestic flying in addition to a freeze on international flights and put 80 per cent of its 10,000 employees on leave.
Virgin is also looking to close its New Zealand cabin crew and pilot bases and its pilot base for low-cost arm Tigerair Australia in Melbourne, in a sign it will not be back to business as usual when demand returns.
"We plan to return Tigerair Australia and Virgin Australia to the skies as soon as it is viable to do so. However, I am mindful that how we operate today may look different when we get to the other side of this crisis," Virgin chief executive Paul Scurrah said in a statement.
Air New Zealand, which plans to cut up to 30 per cent of its staff, has also warned it could re-emerge as a smaller airline once the coronavirus situation subsides.
Other Asian carriers have also deepened capacity cuts, with Thai Airways International on Tuesday cancelling nearly all of its international flights as demand for travel slumps amid the coronavirus outbreak.
Japan Airlines said on Tuesday it will cut flights on international routes from the country by about 64 per cent between March 29 and April 30.
Data firm Cirium on Tuesday estimated the number of aircraft placed in storage since January had climbed to 3,500 - up 1,000 from a day earlier - as more airlines ground planes.
Taxiways, maintenance hangars and even runways at major airports are being transformed into giant parking lots.