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Qantas to raise A$1.9b and cut 6,000 jobs to survive
QANTAS Airways Ltd will raise as much as A$1.9 billion (S$1.8 billion) and cut at least 6,000 jobs as the coronavirus pandemic continues to keep carriers around the world largely grounded.
The Australian airline said on Thursday also that 15,000 workers will remain furloughed, particularly those tied to international operations. The carrier's entire fleet of 12 Airbus A380 superjumbos, which once plied busy long-haul routes to Europe and the US, are now useless and will be grounded for at least three years, Qantas said.
The brutal overhaul - a 20 per cent reduction of the workforce - shows how swiftly fallout from the virus can overrun even one of the world's strongest airlines. As recently as May, Qantas said that it had enough cash to hold out until December 2021. But with the global pace of infections accelerating, airlines worldwide are now expected to lose more than US$84 billion in 2020 alone and face a years-long recuperation.
"We've never experienced anything like this before, no one has," chief executive officer Alan Joyce said on a media call. "We're facing a sudden reversal of fortune that is no one's fault. That is very hard to accept."
The change in outlook at Qantas is as stark as any in the industry. The company emerged from Mr Joyce's previous three-year turnaround programme in 2017 with some of the fattest profit margins in the business after shedding 5,000 jobs. The airline was generating so much cash it returned more than A$3 billion of it to shareholders.
More recently, Mr Joyce was in the final stages of an ambitious plan to launch unprecedented services connecting Sydney with London and New York as soon as 2023. They were to be the world's longest direct commercial routes. Now they're on ice, and Mr Joyce is starting from scratch again.
On Thursday, he announced the airline's first equity raising in a decade, and a second three-year plan centered on cost reductions to plot a path beyond the virus.
At the board's request, Mr Joyce agreed to remain CEO until at least the end of the 2023 financial year while he attempts to oversee a recovery.
Qantas stock, down 41 per cent this year, was halted for the announcement. BLOOMBERG