Qantas Airways has announced that it will repay A$450 million ($422 million) in senior unsecured bank debt on 20 August, eight months ahead of schedule.
The airline says that the repayment will be primarily funded by its recent issue of Australian dollar medium term notes. Together with the repurchase of $254 million of its 6.05% notes that were due in April 2016, it adds that it has “significantly extended” its debt maturity profile.
Qantas has been locked in a tight battle on the domestic market with rival Virgin Australia, which resulted in it losing its investment-grade rating late last year. It is also expected to announce a rare net loss for the year ended 30 June.
In response, the airline has signaled that it will slow capacity growth during the July-September quarter and cut some international routes. It has also delayed delivery of some aircraft.
Nevertheless, the airline maintains that it has a strong cash position, with A$3 billion in cash and undrawn bank facilities. It also has 49 mid-life aircraft that will become unencumbered between fiscal 2014 and 2017 as debts on those aircraft are repaid.