Covid 19 coronavirus: Qantas job cuts - how do they compare to Air New Zealand?

Qantas is gearing up for more domestic flights in Australia. Photo / Supplied

Qantas is laying off 6000 staff and raising a further A$1.9 billion ($2.03b) to ride out the Covid-19 pandemic, in moves that could provide a guide to Air New Zealand's equity building options.

The airline has hopes for a transtasman travel bubble but it may not come sooner than its expected return to other international flying in 12 months' time.

Qantas is burning through about A$40 million in cash a week and is returning to the market to bolster its liquidity.

It raised A$1.05b as the Covid-19 crisis intensified in March.

The latest equity raising comprises a fully underwritten institutional placement of about A$1.36b and a non-underwritten share purchase plan for eligible existing shareholders to buy up to A$500m worth.

About 372.7 million shares issued under the placement represent a 25 per cent increase in total shares on issue — which itself has decreased by more than a third through share buybacks in recent years.

Qantas will store its 12 A380s in the Mojave Desert for up to three years. Photo / Supplied

Air New Zealand has confirmed it is looking at options to raise capital, in addition to the $900m Government loan it has the option of tapping into.

Harbour Asset portfolio manager Shane Solly said Qantas' move pre-empted likely moves by Air New Zealand.

"They may wait and see how it goes but capital markets are really robust. Air New Zealand will have its own way of doing this and when and how much is the question," he said.

While Qantas says it will be a much smaller airline, it is confident it can rebuild its domestic business — which accounts for about two-thirds of its turnover — and chief executive Alan Joyce is enthusiastic about the formation of a transtasman travel bubble.

Through its Jetconnect subsidiary, Qantas has about 700 staff in New Zealand and they were not included in the 6000 layoffs announced yesterday.

Joyce expressed optimism about the transtasman bubble. "It really is a massive market and volume. New Zealanders [are] the second largest tourism group to come to Australia. Chinese were number one before Covid-19. Australians are the largest tourism group to go to New Zealand. So this is really good for tourism in both countries."

But the airline is not banking on opening up substantial international operations before July of next year and there was uncertainty about timing of the bubble.

"We have to be realistic about it and saying, with what's happening in the rest of the globe it is probably an extended period of time before we'll open up those borders," he said during a media call.

While Australia is just opening its domestic network, Joyce pointed to a strong pent-up demand for travel within New Zealand.

"The recent Jetstar sale that we did is a good indication of why we have confidence for domestic in New Zealand."

When Qantas subsidiary Jetstar launched its return to New Zealand with fares starting at $19, it sold 200,000 seats twice as quickly as promotional fares before Covid-19 hit.

As part of a three-year recovery plan, the Australian airline is shedding 6000 (20 per cent) of its staff, but the cuts are not as deep as at Air New Zealand, where 4000 of 12,500 staff (32 per cent) have so far lost their jobs — and more could follow.

Qantas had 29,000 staff at the start of the year and while thousands more will remain on stand-down, the airline expects to have 15,000 back at work by year's end as it ramps up domestic operations.

Qantas is retiring the last of its Boeing 747s early. Photo / Grant Bradley

Qantas is increasing domestic capacity to 15 per cent of pre-coronavirus levels following an easing in restrictions that had resulted in the airline standing down two-thirds of its 30,000-member workforce in March.

Job losses are across Qantas and Jetstar and include:

• Non-operational — at least 1450 job losses, mainly in corporate roles, due to less flying activity.
• Ground operations — at least 1500 job losses across airports, baggage handling, fleet presentation and ramp operations due to less flying activity.
• Cabin crew — at least 1050 job losses due to early retirement of its six remaining 747s and less flying activity. A further 6900 cabin crew will be on stand-down from July 2020 onwards.
• Pilots — at least 220 job losses, mostly due to early retirement of the remaining six 747s. A further 2900 pilots will be on stand-down from July 2020 onwards.

Joyce will stay on until at least the end of the 2023 financial year and yesterday said costs would be cut by $15b during the next three years of lower activity. There would be $1b in ongoing cost savings per annum from the 2023 financial year.

He said Qantas entered the Covid crisis in a better position than most airlines and had some of the best prospects for recovery, especially in the domestic market, but it would take years before international flying returns to what it was.

"We have to position ourselves for several years where revenue will be much lower. And that means becoming a smaller airline in the short term."

About 100 planes would be grounded for 12 months, some longer.

While most of the group's long-haul aircraft were expected to steadily return to service over time, there was uncertainty about when flying levels will support its 12 Airbus A380s. They will be parked in the Mojave Desert for up to three years.