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Qantas secures more funding to wait out coronavirus crisis; shares rise

Jamie Freed and Shruti Sonal
FILE PHOTO: Workers are seen near Qantas Airways, Australia's national carrier, Boeing 737-800 aircraft on the tarmac at Adelaide Airport

By Jamie Freed and Shruti Sonal

SYDNEY/BENGALURU (Reuters) - Qantas Airways Ltd <QAN.AX> said on Tuesday it had secured enough funding to last it through the end of next year, boosting its shares, as it reviews its fleet with the expectation that most international travel could take years to rebound.

The Australian carrier secured A$550 million ($352.99 million) against three of its Boeing Co <BA.N> 787-9 aircraft and said it could raise another A$2.7 billion from other aircraft assets if needed. It also said it would reduce its cash burn rate to A$40 million a week by the end of June.

"This means we are very well placed to ride this out and to take part in the recovery when it arrives," Qantas Chief Executive Alan Joyce told reporters. "Because Australia has flattened the curve there is some hope travel demand will come back faster than expected," he said, referring to a plateau in the COVID-19 infection rate.

Joyce also said the airline saw no need to raise equity.

Qantas shares climbed as much as 5.6% during trading after the market update.

Australia has recorded around 6,800 infections and 96 deaths from COVID-19 and has maintained low single-digit daily rises in new cases for weeks, leading to a loosening of social distancing restrictions in some states and hopes for a domestic tourism revival this year.

Qantas has cancelled most domestic flights until the end of June and international flights until the end of July.

A full recovery in international travel, with the possible exception of New Zealand, could take years, Joyce said, sparking a review of the airline's fleet.

He said Qantas has shelved plans to order up to 12 Airbus SE <AIR.PA> A350 planes capable of non-stop Sydney-London and Sydney-New York flights, and could keep some of its 12 A380s grounded depending on the pace of a recovery.

"We have to plan for a range of scenarios," Joyce said.

More than 25,000 of the airline's staff have been stood down until at least the end of June at a time when the carrier is flying 5% of its pre-crisis domestic passenger network and 1% of its pre-crisis international network.

Joyce said there was the ability to scale up quickly if demand returned and the airline was well-placed to pick up domestic and international market share during a recovery due to its strong financial position.

The company's smaller rival Virgin Australia Holdings Ltd <VAH.AX> last month entered voluntary administration after being battered by the coronavirus crisis and a high debt load.

Virgin's administrators have said more than 20 potential buyers have expressed interest in buying the country's second-largest airline.


(Reporting by Jamie Freed in Sydney and Shruti Sonal and Nikhil Kurian Nainan in Bengaluru; Editing by Jane Wardell and Christopher Cushing)