Qan­tas ex­tends flight sus­pen­sion, credit use


QAN­TAS has ex­tended the sus­pen­sion of most of its do­mes­tic and trans-Tas­man flights un­til the end of June, and for in­ter­na­tional flights un­til the end of July.

But the air­line said some ca­pac­ity could be added back within a week if do­mes­tic and trans-Tas­man re­stric­tions eased ear­lier.

“The ini­tial eas­ing of govern­ment re­stric­tions sug­gests some do­mes­tic travel may start to re­turn be­fore the end of July, though ini­tial de­mand lev­els are hard to pre­dict,” Qan­tas said.

Also, the air­line is al­low­ing cus­tomers whose flights are can­celled be­cause of the coro­n­avirus cri­sis to split travel cred­its across fu­ture book­ings, and is giv­ing them more time to use the credit. Qan­tas said the stand-down of two-thirds of its 30,000-mem­ber work­force would be ex­tended un­til at least the end of June.

Aus­tralia’s flag car­rier said it had se­cured fur­ther debt fund­ing of $550 million against three of its wholly-owned Boe­ing 787-9 air­craft fol­low­ing the $1.05 billion raised in March against seven of its 787-9s.

“The group has suf­fi­cient liq­uid­ity to re­spond to a range of re­cov­ery sce­nar­ios, in­clud­ing one where the cur­rent trad­ing con­di­tions per­sist un­til at least De­cem­ber 2021,” Qan­tas said.

It could raise more funds against its $2.7 billion in un­en­cum­bered air­craft as­sets, the air­line said.

By the end of June, it ex­pects to reach a cash burn rate of $40 million a week, which is $2.08 billion a year. It has $3.5 billion in short-term liq­uid­ity, in­clud­ing $1 billion in an un­drawn debt fa­cil­ity.

“Our cash balance shows that we’re in a very strong po­si­tion, which un­der the cir­cum­stances we ab­so­lutely have to be,” Qan­tas chief ex­ec­u­tive Alan Joyce said.

“We don’t know how long do­mes­tic and in­ter­na­tional travel re­stric­tions will last or what de­mand will look like as they’re grad­u­ally lifted.”

With the pos­si­ble ex­cep­tion of New Zealand, it could take years for in­ter­na­tional travel de­mand to re­turn to what it was, Mr Joyce said.

The air­line is cur­rently op­er­at­ing about five per cent of its pre-cri­sis do­mes­tic net­work and one per cent of its in­ter­na­tional net­work.

The air­line would have to re­view the size of its fleet, net­work and cap­i­tal ex­pen­di­ture, Mr Joyce said, adding “our com­mit­ment to serve communitie­s across Aus­tralia will not change”.

Qan­tas said it had closed out all its hedged po­si­tions for its fuel needs in early April, in­cur­ring losses but avoid­ing the pre­cip­i­tous falls in oil prices that oc­curred in the sec­ond half of the month. The air­line had hedged all its fuel needs for the year as a means to pro­tect it­self from fuel price fluc­tu­a­tions, which delivered ben­e­fits in the first half but re­sulted in losses as the pan­demic caused oil prices to fall.


GROUNDED: Qan­tas CEO Alan Joyce sees a long route to re­cov­ery.

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