Qantas grounded its fleet, raised A$1.9bn and cut jobs — and outlived its bankrupt rival

When Australia closed its borders in March 2020, Qantas suspended about 60% of domestic flying within days, halted international flying entirely and told the majority of its 30,000-strong workforce to take leave. Roughly two-thirds of employees — about 20,000 people — were stood down, and up to 100 aircraft including the entire A380 fleet were grounded.

In June 2020, chief executive Alan Joyce set out the price of surviving without a state equity injection: 6,000 jobs cut, about 15,000 staff kept on furlough, 100 planes parked, aircraft purchases deferred — and A$1.9bn of new equity, Qantas's first capital raising in ten years. Joyce was blunt that the collapse in billions of dollars of revenue left 'little choice' if the airline was to save as many jobs as possible long term.

The contrast played out with its rival. Virgin Australia, carrying about A$7bn of debt built up through years of loss-making fare wars, entered voluntary administration on 21 April 2020 — the first major Australian airline collapse since Ansett in 2001. Its creditors eventually accepted Bain Capital's rescue, handing control to private equity; Qantas stayed listed, independent and investment-grade.

By August 2023 Qantas reported a record A$2.47bn underlying profit as travel demand surged, reinstated dividends and announced buybacks. The recovery was real but not clean: the airline spent 2022-23 fighting regulators, unions and class actions over cancelled-flight credits and outsourced ground jobs, and Joyce brought forward his retirement that September.

Record A$2.47bn underlying profit in FY2023; Australia kept two airlines while old Virgin Australia went to receivers and re-emerged under Bain Capital.

Qantas carried far less debt than Virgin, so it could choose between private equity and state support instead of having creditors choose for it.

Raising A$1.9bn early, at a known discount, was cheaper than losing control — the shareholders who paid kept the airline.

Cutting jobs while shielding the network, slots and loyalty programme preserved the assets behind the 2023 rebound.

Australia's closed borders cut both ways: they destroyed revenue but froze foreign competition and delivered a captive domestic recovery.

The depth of the cuts bought credibility with bondholders and the equity market — which is what made the raise possible.

In an existential demand shock, sequencing decides survival: raise equity early, cut deep enough to fund the wait, protect what the recovery needs. Bailout money is cheap on the day, costly later.

Qantas's dominance after the collapse bred its own problems. The Australian Competition and Consumer Commission sued the airline in August 2023 for selling tickets on flights it had already cancelled, courts ruled against its outsourcing of ground handlers, and a class action over A$1bn-plus in held flight credits followed. Joyce left two months after the record profit, under a cloud that the profit could not lift. The strategic verdict still stands: Australia remains one of the few countries where the pandemic ended with two functioning major airlines and no state-owned carrier.