News of a new debt facility of $400 million for Qantas should send investors zipping up their wallets. Qantas Group is Australia’s largest domestic and international airline.

Back in 2000 the balance sheet of Qantas comprised:

›  $2.8 billion of shareholders equity

›  $3.1 billion of bank debt

For financial year 2000, Qantas reported earnings of $517 million giving an ROE of 17.45%.

But more recently, Qantas recorded a normalised loss of $16.3 million. The 2012 loss follows the $317 million profit of 2011, the $175.2 million profit of 2010 and the $164.6 million profit of 2009.  All of these were lower than what the business reported its earnings to be in 2000 – eleven years ago.

The company however has seen its debt balloon in that time to $6.5 billion and shareholders equity is at $5.9 billion. Meanwhile any simple bank account, with an additional $12.4 billion of capital injected, would be earning more than it did a dozen years ago.

Owners have put in another $3 billion of equity on top of the $2.8 billion injected by 2000. But despite the life support, the company still lost $16 million in 2012.

Even with the very best management running the show and the most generous bankers, there’s no escaping these economics.