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JUNE 2020

Week 25

Daily Update

Orient Aviation's COVID-19 briefs: Qantas to cut 6,000 jobs, 20% of 29,000 workforce

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June 25th 2020

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  • Qantas said today it would cut 6,000 jobs – some 20% of the airline group's 29,000 employees. The decision will allow the group to keep about 100 aircraft grounded for 12 more months at least, defer new aircraft deliveries, raise up to A$1.9 billion (US$1.3 billion) in fresh equity and seek A$15 billion in cost savings to 2023 to survive the coronavirus pandemic. Read More »

    The job cuts, across Qantas and Jetstar, are 1,450 in non-operational roles, 1,500 staff employed in ground operations, 1,050 cabin crew, 630 employees in engineering divisions, 220 pilots and also contractors in corporate functions, including IT, the airline group said. In addition to the redundancies, 15,000 "temporary surplus" staff would remain stood down, on annual leave or on the books as leave without pay staff until flying activity increased.

    The equity raising is a bundle of a  A$1.36 billion fully underwritten institutional placement and a non-underwritten share purchase plan for existing shareholders worth about A$500 million. The institutional share placement was priced at $3.65 per share, which represented a 12.9% discount to Qantas's closing price of $4.19 on the Australian Securities Exchange yesterday.

    Qantas group CEO, Alan Joyce, said the company had to become a smaller airline in the short term amid expectations revenue would be much lower in the period ahead and because it was likely to take years before international flying would return to pre-COVID-19 levels. “Adapting to this new reality means some very painful decisions. The job losses we’re announcing today are confronting," Joyce said. Qantas said Joyce had agreed to remain as group CEO for three more years at the request of the board.
     
  • The International Air Transport Association (IATA) has called on countries with quarantine measures in place for foreign arrivals to consider alternatives that would reduce the risk of importing COVID-19 infections while allowing the resumption of travel and tourism activity described as "vital to jumpstarting national economies". "We are proposing a framework with layers of protection to keep sick people from traveling and to mitigate the risk of transmission should a traveller discover they were infected after arrival,” IATA director general and CEO, Alexandre de Juniac, said overnight.
     
  • Japanese carrier, All Nippon Airways (ANA), has cancelled the planned resumption of a daily Tokyo Haneda-Bangkok service, due to take off from July 1, and tweaked its schedule for Tokyo Narita-Manila flights. The changes, which affected 15 flights, were "based on the shift in demand and the strengthening of regulations regarding immigration control and quarantine in each country", ANA said in a statement today. The airline planned to operate about 10% of its originally scheduled capacity in July.
     
  • AirAsia Group said yesterday daily ticket sales across the LCC group reached 41,000 on Monday, which it described as the "highest post-hibernation sale day". "We are encouraged by this positive trend and we foresee this will continue in the coming weeks. We are aiming to increase our flight frequencies to around 50% of our pre-COVID operations. We look forward to resuming all domestic routes in the coming weeks and months to cater to the increasing demand," AirAsia group CEO, Tony Fernandes, said in a statement. 
     
  • Thailand-based LCC, NokScoot, plans to remove three aircraft from its operations and make up to 50% of its staff redundant due to the impact of the coronavirus on the aviation sector, local media reported yesterday. The medium-haul LCC, 51% owned by Thailand carrier, Nok Air, and 49% by Singapore's Scoot, operates international flights from its Bangkok Don Mueang hub. It said demand was unlikely to return to levels prior to the COVID-19 pandemic until 2022 or 2023.

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