Qantas implements costs reducing measures upto AU$ 15 billion.
Qantas Group today introduced a three-year strategy to guide recovery and return to growth in a changed post-coronavirus market. The company will reduce its total costs by AU$15 billion during a three year period of lower activity.
Qantas will ground around 100 aircraft – including all 12 Airbus A380 – for another year and will defer new deliveries (Airbus A321neo and Boeing 787-9). All six remaining Boeing 747’s will be retired with immediate effect.
Qantas seeks $ 1.9 billion in new equity
The impact of the new recovery strategy has a massive impact on the airline’s workforce: 15,000 employees will remain grounded and the airline is planning to cut around 6,000 jobs in all divisions of the company.
Qantas seeks to raise $1.9 billion in new equity, including fully underwritten placement of $1.36 billion plus $500 million in non-underwritten shares. This should bolster liquidity to $4.6bln.
Qantas Group CEO review on post-covid recovery plan for the future
Announcing the plan Qantas Group CEO Alan Joyce said: “The Qantas Group entered this crisis in a better position than most airlines and we have some of the best prospects for recovery, especially in the domestic market, but it will take years before international flying returns to what it was.
“We have to position ourselves for several years where revenue will be much lower. And that means becoming a smaller airline in the short term. “Most airlines will have to restructure in order to survive, which also means they’ll come through this leaner and more competitive. For all these reasons, we have to take action now.
CEO Alan Joyce states the new post-covid reality forces to make painful decisions.
“Adapting to this new reality means some very painful decisions. The job losses we’re announcing today are confronting. So is the fact thousands more of our people on stand down will face a long interruption to their airline careers until this work returns.
“What makes this even harder is that right before this crisis hit, we were actively recruiting pilots, cabin crew and ground staff. We’re now facing a sudden reversal of fortune that is no one’s fault, but is very hard to accept.
“This crisis has left us no choice but we’re committed to providing those affected with as much support as we can. That includes preserving as many jobs as possible through stand downs, offering voluntary rather than compulsory redundancies where possible, and providing large severance pay-outs for long serving employees in particular.
Qantas CEO remains fundamentally optimistic
“As we’ve done throughout this crisis, our decisions are based on the facts we have now and the road we see in front of us. Our plan gives us flexibility under a range of scenarios, including a faster rebound or a slower recovery.
“Despite the hard choices we’re making today, we’re fundamentally optimistic about the future. Almost two-thirds of our pre-crisis earnings came from the domestic market, which is likely to recover fastest – particularly as state borders prepare to open. We have the leading full service and low fares airlines in Australia, where distance makes air travel essential, and diversified earnings through Qantas Loyalty.
“We still have big ambitions for long haul international flights, which will have even more potential on the other side of this.
“As a business, recapitalising means we can get ready sooner for new opportunities, returning to profit and building long term shareholder value. As the national carrier, we remain committed to supporting tourism, connecting regional communities and safely flying millions of people every year.”