CANBERA (dpa-AFX) - Australian airline Qantas Airways Ltd. (QAN.AX, QUBSF.PK) announced Thursday that it expects fiscal 2020 result between breakeven and a small underlying profit before tax, impacted by significant reduction in revenue during the second half.
Further, the company announced a three year plan to accelerate its recovery from the COVID-19 crisis and return to growth in changed market.
The immediate focus of the plan is to rightsize the workforce, fleet and other costs according to demand projections, with the ability to scale up as flying returns. The company said the plan will result in a large number of job losses across Qantas and Jetstar.
The plan targets benefits of A$15 billion over three years, in line with reduced flying activity including fuel consumption savings. The company also projects $1 billion per annum in ongoing cost savings from fiscal 2023 through productivity improvements across the Group.
The company said it will reduce pre-crisis workforce by at least 6,000 roles across all parts of the business. Further, it continues the stand down for 15,000 employees, particularly those associated with international operations, until flying returns.
Qantas plans to retire Qantas' six remaining 747s immediately, six months ahead of schedule. Also, up to 100 aircraft will be grounded for up to 12 months, and some for longer, including most of the international fleet.
The cost of implementing the plan is estimated at A$1 billion, with most of this realised during FY21.
Further, the company's Board announced that its plan to seek to raise up to A$1.9 billion, comprising of a fully underwritten institutional Placement to raise approximately A$1.36 billion and a non-underwritten Share Purchase Plan for eligible existing shareholders to participate of up to A$500 million.
Proceeds from the Equity Raising will be used to accelerate the company's recovery, strengthen its balance sheet and position it to capitalise on opportunities aligned with its strategy.
Regarding its 29,000 employees, the company said around 8,000 are expected to have returned to work by the end of July this year. It's anticipated that this will increase to around 15,000 by the end of calendar year 2020 in line with the opening up of domestic flying, and increase further during calendar 2021 and 2022 as the international network returns, reaching 21,000 active employees by June 2022.
Redundancies are proposed to manage a surplus of around 6,000 roles, with the temporary surplus of around 15,000 managed through a mix of stand down, annual leave and leave without pay.
Regarding the job losses, the company will consult with relevant unions. In Qantas and Jetstar, the job losses will include at least 1,450 in non-operational, mainly in corporate roles, due to less flying activity.
Ground operations will impact at least 1,500 job losses across airports, baggage handling, fleet presentation and ramp operations due to less flying activity.
The company also projects at least 1,050 job losses in Cabin crew, at least 630 job losses in Engineering and at least 220 Pilots.
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