Australia’s flag carrier, Qantas Airways, has announced plans to cut 6,000 jobs, translating to about 20% of its entire workforce. The airline will spend around $600 million on related payments.
Around half of the job cuts will cut across ground operations staff and non-operational staff, with the rest being a mix of cabin crew, engineers, and pilots.
Furthermore, 15,000 workers will remain furloughed until Qantas begins operating more flights. As state borders begin reopening, the airline expects to attain 40% of normal capacity in July, an average of about 70% next financial year and 100% in FY2022.
The airline will also ground 100 aircraft for up to 12 months and retire its remaining Boeing 747 fleet immediately, six months ahead of schedule. It will also defer deliveries of recent Airbus A321neo and Boeing 787-9 plane.
Qantas Airways is also planning to raise up to $1.3 billion through a share sale under a sweeping cost-saving plan prompted by the coronavirus pandemic. The share sale will comprise of a $1 billion placement to institutional investors at $2.51 per share. Another $344 million will be raised through a share purchase plan for retail investors
The cost-saving plan which includes reduced fuel expenses is expected to save around $10.3 billion.
With international operations on hold, Qantas estimates to take an impairment charge of up to $962 million, mostly due to its fleet of 12 Airbus A380s, which are not expected to fly again for at least three years and would be sent to the Mojave Desert for storage. The carrier will initially use its smaller A330s and 787s when international operations resume.
Meanwhile, the company said it expects a hit of $2.8 billion in its full-year accounts as a result of the coronavirus crisis.
The largest proportion of this would be a non-cash asset impairment charge of between $1.25 billion and $1.4 billion to write down the value of its international long haul A380 aircraft fleet.
Qantas also expects $600 million to $700 million in restructuring or redundancy-related costs and another $550 million to $600 million in fuel hedging-related costs brought on by lower fuel consumption.
It expects to incur $200 million in transformation costs and discretionary bonuses to non-executive employees.
In May, Qantas Airways secured $550 million in debt funding against three of its Boeing 787-9 aircraft. This was in addition to a previous $1.05 billion raised in March against seven of its Boeing 787-9s.
The International Civil Aviation Organization (ICAO) estimates that airlines worldwide could face losses amounting to $253 billion by September this year due to COVID-19, with passenger numbers reducing by 1.2 billion
Earlier on in March this year, the International Air Transport Association (IATA) reported that airlines worldwide needed $200 billion (KSh20.8 trillion) capital injection for them to remain afloat in this COVID-19 pandemic. At the time, 75% of the airlines only had cash to cover three months of their fixed expenses.
Qantas Airways Limited is Australia’s flag carrier and is the largest airline by fleet size, international flights, and international destinations. It is the third oldest airline in the world, after KLM and Avianca.