(Bloomberg) -- Qantas Airways Ltd. warned public appetite to fly overseas could take years to return as the airline borrowed yet more funds to weather aviation's biggest-ever crisis.
The Australian carrier said Tuesday it raised an additional A$550 million ($354 million) to ride out a near-halt in passenger revenue because of the coronavirus. Qantas shares climbed after the airline said it now has enough liquidity to withstand current conditions until December 2021.
“It will be some time before total demand reaches pre-crisis levels,” Chief Executive Officer Alan Joyce said in a statement. “With the possible exception of New Zealand, international travel demand could take years to return to what it was.”
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Governments worldwide have devoted more than $85 billion to propping up airlines as the virus wipes out travel demand and grounds fleets. With a drawn-out recovery looming, Joyce said Qantas's fleet, routes and expenditure will all have to reviewed.
“We need to think about what the Qantas Group should look like on the other side of this crisis in order to succeed,” he said.
Qantas in March furloughed most of its 30,000-strong workforce and scrapped virtually all international flights. On Tuesday, the carrier extended international flight cancellations until the end of July and put on hold its Project Sunrise plan for direct services connecting Sydney with New York and London.
Still, new infections in Australia have slowed to a trickle and the government is due to discuss a potential international air corridor with New Zealand on Tuesday. Both countries have managed to avoid the explosive growth in cases seen in other nations.
New Zealand Prime Minister Jacinda Ardern has labeled the proposal a “trans-Tasman travel bubble.” If successful, the agreement could be a model for other countries to restart international services once the pandemic is over.
Qantas said it borrowed against three wholly owned Boeing 787-9 jets in its latest round of fundraising. That followed the A$1.05 billion raised in March against seven planes. Domestic flight cancellations were extended by a month to the end of June.
Qantas shares were up 2.4% at A$3.65 at 2:09 p.m. in Sydney, paring an earlier gain of 5.6%.
Click here to read details from the statement
The crisis hitting the sector has already claimed Qantas's main domestic rival Virgin Australia Holdings Ltd. The Brisbane-based carrier collapsed into voluntary administration last month under A$6.84 billion of debt and administrators are looking for new owners.
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Cost cutting at Qantas should reduce its weekly net cash burn to A$40 million by the end of June, the airline said. As of May 4, total short-term liquidity stood at A$3.5 billion, including a A$1 billion undrawn facility.
Qantas said it's currently operating around 5% of its pre-crisis domestic passenger network and 1% of its international network.
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