Talk over whether Qantas may tap market for equity

Some have tipped another $1bn equity raising could be on the cards for Qantas. Picture: AAP

Qantas reports its earnings results this Thursday and the question being asked around the market is whether it is once again preparing to tap the market.

Some have tipped another $1bn equity raising could be on the cards, with extended lockdowns to stem the spread of the Covid-19 Delta strain having an adverse affect on the international travel outlook.

Qantas stood down 2500 workers at the start of this month on the back of the Sydney lockdown.

Analysts said that the country’s national carrier had $4bn of liquidity at the end of April and had previously had a low cash burn of around $50m per week.

But they said that could be lower this year, with last year’s expenses having included a large number of passenger refunds, debt repayment to bond holders and capital spending on Boeing 787s that it had not yet taken possession of from their Seattle manufacturer.

But some in the market still said a raise could be brewing.

Air New Zealand will report its earnings results on the same day and has delayed its equity raising plans until next year.

This means should Qantas opt to tap the market for equity it would face a free run in the market.

Last year, Qantas raised equity through JPMorgan and Macquarie Capital, securing $1.9bn.

JPMorgan is a major lender to Qantas so is likely to appear on the ticket again should a raise proceed.

The last equity injection involved a $1.4bn share placement and a $500m Share Purchase Plan for retail investors, with shares sold at $3.65 each, a 12.9 per cent discount to their last close of $4.19.

It took the airline’s net debt to $4.7bn against a market value of $6.25bn and then had $3.6bn in cash.

Qantas shares on Friday closed at $4.25.