Qantas raising falls well short of $500m target

Qantas has seen little support from shareholders for a new share offer, raising $72m instead of the targeted $500m.

Qantas aircraft parked at Avalon Airport. Picture: Stuart McEvoy

A Qantas share offer intended to generate as much as $500m has fallen well short, raising $71.7m.

Just 5 per cent of eligible shareholders took part in the share purchase plan (SPP) announced on June 25, with an average total purchase worth $8200.

The SPP followed an institutional placement that raised $1.36bn to help Qantas accelerate its recovery from the COVID crisis.

A statement to the ASX said the timing of the SPP coincided with a series of tightened border restrictions across the country in response to a COVID-19 outbreak in Melbourne and small clusters elsewhere.

“While the Qantas Group’s recovery plan anticipates some uncertainty associated with the pandemic, the timing of these events and the implications for travel demand had an obvious impact on the Qantas share price and the take-up of the SPP offer by eligible shareholders,” said the statement.

Qantas confirmed all eligible shareholders who applied for shares, would be granted their application in full. As a result Qantas expected to issue 22.5 million new fully paid ordinary shares.

Those shares would be issued at $3.18 a share, representing a 2.5 per cent discount to the five-day volume weighted average price of Qantas shares up to August 5.

The lower than expected funds from the share purchase plan were not expected to significantly dent Qantas’ outlook as it strives to emerge from the COVID crisis intact.

On June 25, CEO Alan Joyce announced the airline would be leaner in the short to medium term, with a workforce of 23,000 down from 29,000, and the fleet of A380s to remain in storage until international demand recovered.

Qantas previously secured $1.6bn worth of loans against its wholly-owned, near new Boeing 787s, to help it see out the pandemic.

Mr Joyce said the airline had been able to reduce its cash burn to about $40m a week, and was assisted by federal government measures such as Jobkeeper for stood down workers, and the subsidised domestic and freight network.

He recently called for governments to develop a national framework for border closures, to offer greater certainty to airlines, constantly having to revise schedules in response to changing measures.

It followed the Queensland border closure to New South Wales and the ACT that took effect last Saturday, after a modest number of COVID cases in Sydney.

Brisbane-based charter operator Alliance also saw weak demand for a share purchase plan last month, raising $3.8m, well short of the $30m targeted.