Like the big banks, Qantas is looking to go on a post-COVID-19 diet, getting rid of expansionist ideas, businesses that don’t earn their way or detract from future gains.
The three big banks to have reported their lower March 31 results – Westpac, ANZ and NAB – are now at the start of what could be significant restructurings – meaning job losses, asset sales and ditching unwanted areas of business.
Qantas CEO, Alan Joyce made it clear in a post-update briefing that he has put the airline on a similar path.
He was speaking after the airline said in the update that it had borrowed another $550 million (secured against three Dreamliners) to add to the $1.050 billion borrowed in March.
Qantas said in the update that following the downsizing and flight suspensions, it would cost around $40 million a week to keep the airline ticking over from the end of June.
Joyce told a briefing yesterday that Qantas will have to become a different airline after the pandemic and will consider shrinking its fleet and network in line with demand during a years-long recovery from the health crisis.
He confirmed it had put on hold an order for new aircraft to operate its non-stop “Project Sunrise” flights to New York and London and will also consider offloading some of its 12 Airbus A380 super-jumbos.
Mr. Joyce said international travel demand will take years to recover, however, he did see “light at the end of the tunnel” with the potential for domestic restrictions to soon ease and a possible trans-Tasman “bubble” to open up travel to New Zealand.
That was discussed in the national cabinet yesterday with the involvement of NZ PM, Jacinda Arden. She was non-committal on the Trans-Tasman travel idea and told media in New Zealand that more work needed to be done.
Mr. Joyce said any recovery is expected to be gradual – and slowed by a likely global recession – and the airline was looking at its configuration, its flee of airliners, and where it travels.
“The Qantas of 2021 and 2022 will not be the Qantas of 2019,” he said. “We’re looking at the scope and scale of our businesses going forward.”
Qantas said the extra debt gave it sufficient liquidity to survive through to December 2021 even under current trading conditions.
Qantas said it is currently flying the equivalent of about 5% of its pre-pandemic domestic capacity and 1% of its international capacity.
Qantas said that after standing down staff, cutting spending, and renegotiating contracts with suppliers, it expects its net cash burn rate to be $40 million per week by the end of June.
The airline said it was extending domestic and trans-Tasman flight cancellations through to the end of June and other international fights through to the end of July, but could quickly return to capacity if required.
The company said around 25,000 of its 30,000 staff would remain stood-down until at least until the end of June.
Since the last update in March its competitors Virgin Australia and Tiger Air went into voluntary administration a fortnight ago owing almost $7 billion.
Qantas shares rose 1.6% to $3.62 on the update.
