March 24, 2020 / 11:19 PM / 14 days ago

UPDATE 1-Qantas secures $628 mln against aircraft fleet to boost liquidity

* Loan of up to 10 yrs at 2.75% interest rate

* Has A$2.95 bln of cash, A$1 bln undrawn debt facility

* Shares rise 20% in early trading (Adds CEO comments, background on cuts, shares)

SYDNEY, March 25 (Reuters) - Qantas Airways Ltd said on Wednesday it had secured A$1.05 billion ($628 million) of funding against its aircraft fleet to help strengthen its financial position as it grapples with a plunge in demand due to the coronavirus pandemic.

Shares soared 20% in early trading after it secured the loan that has a tenure of up to 10 years, an interest rate of 2.75% and contains no financial covenants in line with the rest of the Qantas debt book.

The carrier last week said it would stop international flying, cut its domestic network, place 20,000 employees on leave and look to raise cash against its fleet of Boeing Co 787s.

Qantas said it had A$2.95 billion of cash, another A$1 billion undrawn credit facility and a further A$3.5 billion of unencumbered assets available.

Its net debt position of A$5.1 billion remains at the low end of its target range and it has no major debt maturities until June 2021, the airline said.

“Over the past few years we’ve significantly strengthened our balance sheet and we’re now able to draw on that strength under what are exceptional circumstances,” Qantas Chief Executive Alan Joyce said in a statement.

“Everything we are doing at the moment is focused on guaranteeing the long-term future of the national carrier, including making sure our people have jobs to return to when we have work for them again,” he said.

Moody’s last week placed Qantas’ investment grade Baa2 credit rating under review for a possible downgrade due to the unprecedented disruption in the aviation industry. ($1 = 1.6714 Australian dollars) (Reporting by Jamie Freed; Editing by Himani Sarkar)

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