MIAMI – Due to the dramatic plunge in air passenger demand, Qantas Airways (QF) pauses Airbus and Boeing aircraft deliveries for the rest of the year.
As the carrier expected the arrival of three Boeing 787-9 by the end of 2020 and the first part of the 18 Airbus A321neo ordered from August 2020 until 2022, it announced that such delivery schedule would not take place as long as the market remains uncertain.
The decision to halt Boeing and Airbus deliveries comes after QF suspended last week its plans to order at least 12 A350 for its Sidney-London route. Now, the delivery remains in a no specific timeline as stated by QF in a report by Reuters.
Suspensions, reductions and salary cuts
Besides the suspended Airbus and Boeing delivery operations, the Australian airline has taken various steps to stave off the negative effects of the pandemic, as it is now just operating by 5% in domestic routes and 1% on international capacity, according to Nasdaq.
On February 20, The Qantas Group announced temporary reductions to flights across Asia in response to lower demand due to Coronavirus. The announcement came as part of the Group’s Half Year Financial Results, showing net-profit losses between $100 million to $150 million for FY20.
Then, on March 11, Qantas CEO Alan Joyce announced he would sacrifice his AU$23m ($15.5m) salary for the rest of 2020. Upper management and board members would also be taking a 30% pay cut.
Raising debt funding and halting projects
Later, on March 27, the Qantas Group raised 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 in cash.
On May 4, as part of its measures to save costs and enhance its liquidity position during the COVID-19 crisis, the company ultimately put its highly anticipated Project Sunrise on hold. The project in question has to do with a dedicated fleet of 12 Airbus A350-1000 Ultra Long Range (ULR) aircraft.
The 12 Airbus A350-1000 ULR aircraft, valued at around US$4.4b in list prices, would enable the carrier to continue with its strategy of global-haul operations for flights between 18 to 20 hours.
As Qantas continues to make sound decisions to survive the current health crisis and its fallout on the commercial aviation industry, more carriers worldwide file for Chapter 11 as industry leaders do not expect operations to return to pre-COVID-19 levels until 2024, 2016 at the latest.