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.