Australian flag carrier Qantas Airways Ltd is reportedly planning to lay off 20% of its employees and raise up to $1.3bn of equity under a cost-saving plan prompted by the coronavirus pandemic.
The move is expected to affect about 6,000 employees of the airline’s 29,000 strong workforce. Around half of the job cuts will be from non-operational and ground operations staff, with the remainder is expected to be a mix of cabin crew, engineers and pilots.
The company on Thursday said that it will ground 100 of its aircrafts for up to a period of 12 months and retire the remaining fleet of Boeing 747 immediately. The plan to retire the 747 is reportedly six months ahead of its earlier decided date.
“We have to position ourselves for several years when revenue will be much lower,” Qantas Chief Executive Alan Joyce said of the three-year plan. “And this means becoming a much smaller airline in the short term.”
Just like any other country in the world, Australia too has closed its international borders in an attempt to contain the coronavirus spread. Officials in the Australian government have said that it is very unlikely that the country will open its borders until next year.
Joyce said Qantas was taking a “realistic” view that there would not be international operations of real scale until July 2021, with a proposed “travel bubble” between Australia and New Zealand a potential exception.
The company expects to save around A$15bn with its cost-saving plan, which also includes reduced fuel expenses. The plan marks Qantas’ first equity raising in just over a decade. It also coincides with what was supposed to be a celebratory 100-year anniversary for the airline.
The capital raising, at a discount of 13% to the airline’s last trading price, includes an underwritten A$1.36bn institutional placement and a A$500mn share purchase plan.
Other than the said job cuts, a further 15,000 workers will remain furloughed until Qantas begins operating more flights. It has begun ramping up domestic flying as state borders reopen and expects to reach 40% of normal capacity in July, an average of around 70% next financial year and 100% in FY22.
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