Qantas Airways Ltd ASX: QAN] the sale of land is expected to generate gross proceeds of $ 802 million and accelerate progress towards meeting QAN’s net debt target by year-end 22.
Qantas is considering other land sales and development proposals with the aim of strengthening its balance sheet.
Qantas Airways Ltd ASX: QAN] The share price is currently trading at $ 5.71 per share, up 2.33%.
As the markets wait for the restrictions to be lifted, QAN shares have managed to rise 30% in the past 12 months.
Qantas strengthens its balance sheet with the sale of land
Qantas has entered into binding agreements with a consortium led by LOGOS Property Group to sell 13.8 hectares of land to Mascot for $ 802 million.
Most of the packages are expected to be settled in the first half of this fiscal year, with funds to be used to reduce debt and accelerate the airline’s recovery.
Unsurprisingly, with a transaction of this size, it will be subject to certain conditions. Qantas will publish more details of the expected financial benefit of the sale in its financial results in February 2022.
QAN also stated that it has entered into discussions with LOGOS on potential development options for the sites that LOGOS is acquiring. This could include the sale of an additional three hectares of land adjoining some of the lots sold.
Qantas plans to complete the assessment of these proposals in early 2022, and if a deal is struck, that could bring the total value of the deal to over $ 1 billion.
Qantas Group CEO Alan Joyce commented:
‘We entered this process with an open mind as to whether we would sell some, all, or none of that land depending on the market response. This response was extremely strong and resulted in the sale of all the land.
‘We will use these funds to help pay off the debt we accumulated during the pandemic. The strength of this sale and its impact on our balance sheet means we can start investing again earlier in critical parts of our business.
‘The prolonged lockdowns and border closures of the past few months have been extremely difficult, but this transaction adds to the growing momentum around our recovery.
‘The date for restarting international travel has been brought forward and the thresholds for opening internal borders in most states are expected to be reached within the next two months.
‘We know that there is strong pent-up demand that we are ready to capitalize on, with some strong signs already.‘
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QAN’s outlook for the past 18 months has depended heavily on macroeconomic factors beyond its control. Travel restrictions induced by the pandemic have hampered its business, but the mood is changing with the country’s vaccination rates.
Interstate and international travel seem increasingly likely. And with it, a rebound in QAN sales.
This is reflected in analysts’ estimates for the iconic airliner.
After a sharp decline in sales in 2021, analysts expect a steady rebound, with 2024 sales estimated to exceed 2019.
But despite growing optimism in Australia over vaccinations, QAN’s big hits due to the pandemic may make some cautious investors wary amid continued uncertainty over COVID-19.
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