Qantas Group, by the voice of its Chief Executive Officer Alan Joyce highlighted the details of the re-structuring plan that would guide the company from the COVID19 recovery phase through the year 2023 when the activity is expected to have fully regained the pre-year 2019 levels.
The three-year (3) recovery plan dubbed « Rightsize, Restructure, Recapitalise » articulates how the group can generate maximum value in the near-term from the company’s activities and processes ; through streamlining, savings and money raising.
From a group-wide physical foot print of almost 30,000 employees, the « Rightsize » plan will see 6,000 employees depart the company. These are long standing, career employees who occupy various fonctions throughout the group.
Regarding the Group’s flight operations, the Rightsize direction will see the immediate retirement of the last six company’s Boeing 747s, six months ahead of schedule. Cascading the effects of the 747 fleet retirement, 1,050 cabin crew, 630 engineering and 220 pilot jobs are to be eliminated.
Because the recovery will be slow and gradual, some 100 aircraft will remain grounded for up to a year or longer. A good portion of the long-haul international fleet is not expected to return to the sky fully untill the year 2023, with ending aircraft leases likely not to be renewed. However it is expected that domestic traffic will reach 40 per cent of the pre-crisis levels during July 2020.
The «Restructuring » segment will secure ongoing cost savings and efficiencies throughout the group primarily by extending the 15,000 current employees furloughs through a mix of stand down, annual leave and leave without pay. As domestic flight operations regain momentum late this year, half of the employees on furlough are expected to return to duty. The other half serving international flights are likely to wait a little longer.
Restructuring flights operations, newer aircraft deliveries will be deferred. This applies mainly to Airbus A321neo and Boeing 787-9. For the twelve (12) Airbus A380 that have already been parked indefinitely, things are less clear. For now they are to be kept in that status indefinitely while some savings are to be extracted from their value’s depreciation.
The group expects to improve its liquidity positions through issuing new shares worth $1.9 billion.
New shares sold to institutional investors will bring in approximately $1,360 million. Each share is to be priced at $3.65, a 12.9% discount from their closing price of $4.19 on Wednesday 24 June 2020. The Group plans to issue 372.7 million new shares representing a 25.0% increase in Qantas’ existing shares.
Some eligible non-institutional shareholders, located in Australia and New Zealand will also be offered shares of the Group. These share will carry an aggregate value of some $300 million.
At the Board’s request, Alan Joyce is to remain and lead the Group at least untill the year 2023.