Just 5 per cent of Qantas investors have taken up an offer to purchase discounted shares in the airline – leaving the business with a potential $430 million funding shortfall.
A statement released to the ASX on Monday morning blamed the poor take-up on tightened border restrictions and the COVID-19 outbreak in Melbourne.
Qantas said in June it was “determined to raise up to $500 million” from the scheme – but ended up generating just $71.1 million.
“The timing of these events and their implications for travel demand had an obvious impact on the Qantas share price and the take-up of the share purchase plan [SPP] offer by eligible shareholders,” said a spokesperson.
In total, only 8,660 out of 173,343 investors took part in the share purchase plan to raise money for the airline, which allowed them to buy stock free of any brokerage, commissions and transaction costs and at a discount of 2.5 per cent.
“The timing of the SPP coincided with a series of tightened border restrictions across Australian states and territories, sparked by a COVID-19 outbreak in Melbourne and small clusters elsewhere,” it said.
Shares in Qantas are currently trading at $3.33 – down from a high of more than $7 in December 2019 but well up on a low of just over $2 in March.
Last week, Australian Aviation reported that Queensland’s surprise decision to shut its border to Sydney caused the business to axe almost one-third of its schedule.
Chief executive Alan Joyce also said the airline is operating at 20 per cent pre-COVID-19 capacity, and not the 45 per cent it hoped to run before borders across Australia were hardened.
“What we’d like to see is real certainty over what’s going to happen with borders and different approaches being taken by different states,” Joyce said. “The principle we all agree on is that health has to be the top priority but the medical experts have said it’s not elimination we’re after, it’s suppression.”
He argued that the current situation had caused “a huge amount of uncertainty” that made it hard to fix on “one potential outcome”. He called the early retirement of the 747 and job losses “heartbreaking”.
Those comments came before Queensland hardened its border yet again at the weekend to all-but lock out all of NSW and the ACT.
The decision meant that, from 1am on Saturday, 8 August, only Queensland residents who have travelled through ‘hotspot’ areas are allowed to return to their home state, and those that do must quarantine at a government facility for 14 days.
Premier Annastacia Palaszczuk said the restrictions were taken after receiving advice from chief health officer Dr Jeannette Young.
“We’ve seen that Victoria is not getting better and we’re not going to wait for NSW to get worse,” said Premier Palaszczuk. “We cannot risk a second wave, we have to act decisively.”