Qantas Group has announced its post-Covid recovery plan today outlining a raft of job losses, suspension of international flights and grounding of 100 aircraft.Desperate measures were announced by the group CEO today in the wake of substantial revenue loss as a result of the pandemic but says the airline has come into the crisis better shape than most on the back of record profits and a solid balance sheet.
Key outtakes from the announcement today are:
- Three year strategy to guide recovery and return to growth in changed market.
- Costs reduced by $15 billion during three year period of lower activity; $1 billion in ongoing cost savings per annum from FY23.
- Around 100 aircraft to be grounded for up to 12 months; some for longer.
- Job losses and extended stand downs to manage long period of reduced flying (especially internationally).
- Equity raising of up to $1.9 billion to accelerate recovery and position for new opportunities.
- Approximately $1.4 billion fully underwritten institutional Placement and up to $500 million non-underwritten Share Purchase Plan
The plan is designed to account for the uncertainty associated with the crisis, preserving as many key assets and skills as the Group can reasonably carry to support the eventual recovery. COVID represents the biggest challenge ever faced by global aviation and the Group’s response to the crisis is scaled accordingly. This unfortunately means a large number of job losses across Qantas and Jetstar.
The plan targets benefits of $15 billion over three years, in line with reduced flying activity including fuel consumption savings, and delivering $1 billion per annum in ongoing cost savings from FY23 through productivity improvements across the Group. Key actions of the plan include:
- Reducing the Group’s pre-crisis workforce by at least 6,000 roles across all parts of the business.
- Continuing the stand down for 15,000 employees, particularly those associated with international operations, until flying returns.
- Retiring Qantas’ six remaining 747s immediately, six months ahead of schedule.
- Grounding up to 100 aircraft for up to 12 months (some for longer), including most of the international fleet. The majority are expected to ultimately go back in to service but some leased aircraft may be returned as they fall due.
- A321neo and 787-9 fleet deliveries have been deferred to meet the Group’s requirements.
The cost of implementing the plan is estimated at $1 billion, with most of this realised during FY21.