The point of the exercise, however, isn’t about debt reduction but a lengthening of its maturity profile. The debt Qantas is buying back was due to mature in April next year and forms part of about $1.6 billion of borrowings that would have matured between 2015 and 2017.
Given that Qantas’ restructuring involves carving another $2 billion from its cost base over the next three years and that about 4000 of the 5000 reductions in its workforce are scheduled to occur by the end of the 2014-15 financial year, those maturities represented a threat to Qantas’ stability during a period when there will be enormous disruption occurring within the business, as well as the heavy upfront cost of funding the change program.