Australian flag carrier Qantas has secured over AU$1bn (£501m) worth of new funding as the airline seeks to bolster its financial position against the ongoing coronavirus disruption.
The debt, which has been taken out against seven of the airlines’ 787-9 planes, will hold for 10 years at an interest rate of 2.75 per cent.
This funding means Qantas’ available cash balance has increased to AU$3bn with an additional AU$1bn undrawn facility also available.
Shares in the carrier closed 26 per cent higher on the back of the news, which comes amid calls for the Australian government to pay out up to AU$250bn in state aid to help embattled airlines survive the coronavirus crisis.
To counter the collapse in passenger demand, Qantas has cut all international flights and put two-thirds of its 30,000 staff on leave, but so far has maintained its investment-grade credit rating.
Chief executive Alan Joyce said: “Over the past few years we’ve significantly strengthened our balance sheet and we’re now able to draw on that strength under what are exceptional circumstances.
“Everything we’re doing at the moment is focused on guaranteeing the long term future of the national carrier, including making sure our people have jobs to return to when we have work for them again.”
The successful raise comes after industry body the International Air Transport Association (IATA) doubled its previous estimates for the damage that global airlines would suffer as a result of the collapse in passenger revenues.
Working on the model of a three-month shutdown, IATA now estimates that the damage to the sector could be as much as $252bn (£212.3bn).
Australia’s second biggest carrier, Virgin, however announced that it would stop 90 per cent of its domestic flying in addition to a freeze on international flights, and put 80 per cent of its 10,000 employees on leave.
The two airlines are currently locked in a spat about who should be eligible for state aid, with Qantas boss Joyce telling local media that it should be a case of “survival of the fittest”.
Virgin Australia have appealed to the country’s competition authority to investigate claims that its rival carrier has been briefing the press that Virgin is not in a financially viable state.