MIAMI – Qantas Group (QF) raises US$623m in debt funding against part of its fleet to maintain itself afloat amid the coronavirus crisis.
The financing has a length of 10 years at an interest rate of 2.75% and was secured through seven of its B787-9s bought with cash in recent years, according to Reuters.
Financial movement despite government loan
With international capacity fully suspended and two-thirds of its 30,000 employees temporarily sent on leave, QF is struggling to maintain its investment-grade credit position.
After the action, the Australian carrier said in a statement that its cash balance increased to US$1.75bn and facilities to US$595m while its net debt remained at US$2.95bn, “with no major debt maturities until June 2021.”
Additionally, the company, also owner of Jetstar Airways (JQ), has US$2.026bn in unencumbered assets to increase its liquidity. The movement meant a rise in shares with the airline’s biggest-ever one-day gain of 31% before closing 26% higher.
Deferred air projects
In the same day, QF Group Chief Executive Alan Joyce announced that Project Sunrise for ultra-long-haul operations was delayed as the deadline to select 12 A350-1000ULRs extended until the end of 2020. The operation started in December 2019, when the fleet was chosen over the Boeing 777X.
While other carriers would have the chance to buy the aircraft, QF took the decision assuming that it was unlikely now to expect a recovery due to the current situation. The signing was scheduled for the end of March.
The talks about deferment between Airbus and airlines are now common and also part of the package of measures that the aerospace corporation is implementing to support customers.