This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.
The Qantas Group has managed to secure A$1.05 billion ($622.6 million) in debt funding against seven of its 11-strong fleet of wholly-owned Boeing 787-9s it bought with cash in recent years, the company announced Wednesday. The loan, carrying a tenure of up to 10 years at an interest rate of 2.75 percent, comes during a period in which the coronavirus outbreak has severely limited the availability of debt financing.
This funding increases the Group’s available cash balance to A$2.95 billion. Another A$1 billion undrawn facility remains available, said the company in a written statement.
“With a further $3.5 billion in unencumbered assets, the Qantas Group retains flexibility to increase its cash balance as a prudent measure in the current climate,” the statement added. “As previously announced, various steps have been taken to significantly reduce activity levels and costs given the dramatic revenue impact of the coronavirus pandemic and the related travel restrictions on Jetstar and Qantas passenger services.”
On March 19 the group announced Qantas and its low-fare Jetstar subsidiary would suspend all scheduled international flying as of late March following an Australian government advisory to all citizens not to travel overseas. Although it plans to retain 60 percent of its domestic flying, the company has decided to lay off two-thirds of its 30,000-strong workforce until at least the end of May. The company said it would ground more than 150 aircraft, including all of Qantas’s A380s, 747s, and 787-9s and all of Jetstar’s 787-8s, adding that it will maintain “as much as possible” essential domestic, regional, and freight connections.
Nevertheless, Qantas CEO Alan Joyce insisted the company remains in a position of relative strength to deal with the unprecedented circumstances in which the entire industry finds itself.
“Over the past few years we’ve significantly strengthened our balance sheet and we’re now able to draw on that strength under what are exceptional circumstances,” said Joyce in reference to the new debt facility. “Everything we’re doing at the moment is focused on guaranteeing the long-term future of the national carrier, including making sure our people have jobs to return to when we have work for them again.”