Qantas will slash costs and is building a war chest to see it through the next three years as it braces for an extended period of lower travel activity following the coronavirus crisis.
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The airline is cutting at least 6,000 jobs across all parts of the business and will continue to stand down 15,000 employees to deal with a reduced flight network.
Australia's flag carrier said it will ground at least 100 aircraft for up to 12 months and reduce $15 billion in costs over the next three years as part of its recovery plan. It is also raising $1.9 billion through a share sale.
"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," Qantas Group CEO Alan Joyce said.
"Most airlines will have to restructure in order to survive, which also means they'll come through this leaner and more competitive. For all these reasons, we have to take action now."
Qantas has been operating domestic capacity at just five per cent of pre-coronavirus levels, which will rise to to 15 per cent this week, following an easing in coronavirus-related social restrictions. It plans to boost capacity to 40 per cent by the end of July.
However, it has cancelled all international flights, except for services to New Zealand, until late October.
The airline in March had stood down two-thirds of its workforce, but on Thursday announced 6,000 jobs will be permanently axed.
Around 8,000 of the group's 29,000 staff are expected to return to work by the end of July, which will gradually increase to around 15,000 by the end of 2020 as domestic restrictions ease.
This will increase further to 21,000 active employees by June 2022 as the international network returns. Qantas said it only expects international flights to meaningfully resume by July 2021.
"We think this is a realistic plan. The domestic market will get back to maybe 70 per cent of pre-COVID levels in the next year but we think international will take a long time," Mr Joyce said over a media call.
It will offer voluntary redundancies to manage a surplus of around 6,000 roles, and will spend around $600 million on related payments.
The temporary surplus of around 15,000 will be managed through a mix of stand down, annual leave and leave without pay, with stand-ups to increase as travel restrictions lift and flying returns.
Mr Joyce will stay on in his role as Group CEO through the next three years.
Qantas also said it is raising $1.9 billion through a share sale to help strengthen its balance sheet and position it to capitalise on opportunities in the future.
The share sale will comprise of a $1.4 billion placement to institutional investors at $3.65 per share, a 12.9 per cent discount to Wednesday's closing price of $4.19.
Another $500 million to be raised through a share purchase plan for retail investors.
Qantas shares have been placed in a trading halt pending the institutional share sale.
The airline is currently burning $40 million in cash every week, Mr Joyce said.
The current equity raising, combined with a $1.5 billion debt raising back in March will help the airline get through to 2023, he added.
Meanwhile, the company said it expects a hit of $2.8 billion in its full-year accounts as a result of the coronavirus crisis.
The largest proportion of this would be a non-cash asset impairment charge of between $1.25 billion and $1.4 billion, to write down the value of its international long haul A380 aircraft fleet.
Qantas also expects $600 million to $700 million in restructuring or redundancy-related costs and another $550 million to $600 million in a fuel hedging-related costs brought on by lower fuel consumption.
It expects to incur $200 million in transformation costs and discretionary bonuses to non-executive employees.
As a result, the Qantas Group expects to report a small underlying profit before tax for the full-year, but has revoked the interim dividend that it had deferred in March.
