(Reuters) – Qantas Airways Ltd
The institutional placement was part of a sweeping three-year cost-savings plan announced by Qantas on Thursday to cope with the coronavirus crisis, which includes axing at least 20% of its workforce and putting more planes into storage.
Australia’s biggest airline reported strong demand for the placement of 372.7 million new shares at a price of A$3.65 each, a near 13% discount to the stock’s close on Wednesday.
“The fact that there was significant demand for this offer shows clear support for our recovery plan and confidence in the fundamentals of this business,” Chief Executive Alan Joyce said.
Qantas also plans to raise up to another A$500 million through a share purchase plan.
Qantas shares, which were suspended on Thursday for the fully underwritten placement, fell as much as 9.5% to A$3.79, the lowest level since May 25, when they resumed trading on Friday. By midmorning they were trading at A$3.83.
Jefferies’ analysts said the capital raising and cost restructure would leave the carrier well-positioned for when the pandemic subsides.
“The ability to reduce debt is also a positive,” Anthony Moulder and Amit Kanwatia wrote in a note.
Morgan Stanley analysts said the plan would “provide an added buffer against any demand volatility through the recovery phase” in the short to medium term.
Citi cautioned, however, that the longer-term outlook remained “considerably uncertain and extremely difficult to forecast” and that Qantas’ recovery would likely be volatile.
(Reporting by Shashwat Awasthi in Bengaluru; editing by Jane Wardell)
