Qantas (ASX: QAN) has announced that it has completed the institutional part of its capital raising.
What is Qantas?
Qantas is Australia’s most popular airline. It was founded in the Queensland outback in 1920, the Qantas name was originally Queensland and Northern Territory Aerial Services. The company operates two main airlines – Qantas and Jetstar – and subsidiary businesses including other airlines, businesses in specialist markets such as Q Catering, Qantas Freight Enterprises and the popular Qantas Frequent Flyer program. It employs some 30,000 people with around 93 per cent of them based within Australia.
What did the airline announce?
Qantas said that it has completed the $1.36 billion institutional part of its capital raising at a price of $3.65 per share.
The airline said it received high levels of interest from both existing institutional shareholders and new investors, with demand to participate in the placement “significantly in excess” of the amount that Qantas wanted to raise. Around 94% of the shares went to existing shareholders.
What will the money be used for? I covered the initial capital raising in detail yesterday. There will be 6,000 job losses, planes grounded and other initiatives to save on costs.
Qantas CEO Alan Joyce said: “The fact there was significant demand for this offer shows clear support for our recovery plan and confidence in the fundamentals of this business. The plan involves some difficult decisions but we are extremely well positioned to get through this crisis and start growing again on the other side.”
Time to buy shares?
The ongoing COVID-19 outbreak in Melbourne could make it hard for the key route of Sydney to Melbourne to resume as early as it may have done. Qantas’ balance sheet is in a strong position now, but there won’t be much earnings for a while. However, if a COVID-19 treatment is found then that could be very helpful.
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
