Qantas has appointed Deutsche Bank to manage a new bond issue that will raise at least A$100 million ($93.6 million).
Sources at the airline have told Flightglobal that the debt raised from the issue will fall due in 2022, with the intention to use the funds to repay debt due in 2016. As a result, the airline’s overall debt will not increase but it will have a longer maturity profile.
Full details of the issue are expected to be announced on the Australian Securities Exchange once pricing is confirmed, the source adds.
Qantas said at a recent investor briefing that it intends to reduce its debt by A$1 billion by the end of the 2015 fiscal year.
It also has an aggressive cost-cutting plan in place aimed at reducing its costs by A$2 billion over three years through aircraft retirements, redundancies and other restructuring efforts.
Late in 2013, Qantas had its credit rating downgraded by Standard & Poor’s to BB+/B, while Moody’s downgraded it in January from Baa3 to Ba2 with negative outlook. S&P has since removed its creditwatch with negative implications on the carrier, and affirmed its long-term BB+ rating.