Qantas: Recovery plan, sack 6,000 raise AU$1.9 billion, retire 747’s, cancel international flights for 12 months

Qantas has developed a three year COVID-19 recovery plan. The cornerstones of the plan includes the 5 ‘R’s’:

• Retrench 6,000 staff (out of a total of 29,000)
• Raise AU$1.9 billion in capital
• Retire remaining 6 Boeing 747 Jumbo’s 6 months early
• Retain but mothball about 100 aircraft – including most of the international fleet for 12 months (bye-bye A380)
• Reschedule deliveries of Boeing 787 Dreamliners and Airbus 320 neos for 12 months time

The board wants Alan Joyce to remain as CEO until at least 2023 to ensure continuity of leadership and stability. That will make Joyce’s reign a total of 15 years.

Roughly 15,000 employees will stay stood-aside until flying resumes to some semblance of normal. At the moment Qantas is flying about 15 % of its pre-COVID domestic capacity and has suspended all international flights.

The staff cuts will look something like this:

• 1450 redundancies in non-operational areas
• 1500 redundancies of ground crew
• 1050 cabin crew
• 630 in engineering
• 220 pilots

This sounds bad, but with some airlines around the world ceasing to exist, or sacking around 50% of their staff, in comparison, the Qantas plan is a good outcome.

Source documents

You can read the CEO statement, the presentation and securities raising yourself.

2PAXfly Takeout

This is another timely reminder to wear your seatbelt when seated. Holding you close to your seat will protect you from the sort of injuries sustained on this flight, when unsecured passengers flew to the ceiling of the aircraft, and then came crashing down once the ‘drop’ ceased.

The hope will be that this is an anomaly – a ‘freak accident’ in casual parlance. If it is a systemic error either mechanical or electronic, then this is a larger concern for the airlines that fly Boeing Dreamliner 787 aircraft. Let’s hope it isn’t. If it is, it will pile on the woes to Boeing’s existing stack.

Didn’t Joyce say a mere matter of weeks ago that they wouldn’t need to raise capital as they had over AU$1billion in cash available, or have I remembered that wrong?

While these kinds of cuts are totally regrettable, they are probably necessary to ensure that Qantas recovers successfully.

My thoughts are with all the staff that are affected, and that includes airport and aircraft manufacturing staff