Qantas has announced today that it has cancelled scheduled domestic services until the end of June and international services until the end of July. The airline also says there is no guarantee flights would resume in August.
The news came in an investor update. Qantas also said it can scale up it’s schedule in as little as a week in the event that domestic and Trans-Tasman travel restrictions ease.
The airline has also secured an additional $A550 million in funding against 3 of it’s wholly owned 787-9 aircraft. This is on top of $A1.05 billion it secured against 7 other 787-9s in March. This brings the airline’s present debt to $A5.8 billion. Finance can still be leveraged against $A2.7 billion worth of additional aircraft.
The Group told investors it has enough liquidity to cover itself in the event current travel restrictions remain in place until December 2021. It also expects a net cash burn of $A40 million per week until the end of June 2020.
The Group is currently flying at 5% domestic capacity and 1% international capacity based on a kilometre per seat basis. Based on flying hours and taking into account charters for the resource sector and passenger craft flying as freighters the group is flying at 13% domestic and 6% international capacity.
The announcement also revealed the Group will allow travel credits to be split across multiple future bookings.
The airline’s freighter division has been using it’s 12 dedicated freighters and passenger A330 and B787 to transport freight to Shanghai, Hong Kong and Tokyo, facilitating export of Australian produce and import of medical supplies. Domestic freight is seeing high demand due to a surge in e-commerce. Demand has been busier than Christmas peaks.
Group CEO Alan Joyce said that there could be $19 Jetstar fares between Melbourne and Sydney and that would cover their cash costs. Project Sunrise will also be placed on hold.
Mr Joyce also said, “Australia has done an amazing job of flattening the curve and we’re optimistic that domestic travel will start returning earlier than first thought, but we clearly won’t be back to pre-coronavirus levels anytime soon. With the possible exception of New Zealand, international travel demand could take years to return to what it was.
“We’re expecting demand recovery to be gradual and it will be some time before total demand reaches pre-crisis levels. That means we need to think about what the Qantas Group should look like on the other side of this crisis in order to succeed. Fleet, network and capital expenditure will all have to be reviewed but our commitment to serve communities across Australia will not change.
“The Government’s support of the aviation industry by underwriting some essential flying, and the support to the broader economy through JobKeeper, have been greatly appreciated. Public health initiatives like the COVIDSafe app are one of the ways we’ll be able to start travelling sooner, so we strongly encourage all Australians to download it.
“I want to recognise our people for their continued support and understanding in the face of this crisis. In particular, those who’ve helped bring Australians home from overseas and kept an essential domestic and regional network running, carrying on what the national carrier has done for 100 years.”