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Qantas sees credit rating cut to junk

Qantas sees credit rating cut to junk

Australian airline Qantas has seen its credit rating downgraded to junk by ratings agency Standard & Poor’s.

The means the agency regards the airline, which yesterday announced further job losses and issued a profit warning, as below investment level.

The downgrade is likely to increase the borrowing costs at the airline and sends a warning to investors.

Yesterday Qantas said it expects to make losses of up to A$300m in the July-to-December period.

In a statement S&P said the rating cut reflected its view “that intense competition in the airline industry has weakened Qantas’ business risk profile to fair from satisfactory, and financial risk profile to significant from intermediate”.

It lowered the carrier’s rating from the lowest investment grade, BBB-, to BB+.

Moody’s rating agency warned on Thursday that it may also lower the Australian flag carrier’s rating.

Qantas has been hurt by a range of factors in recent times including higher fuel costs, subdued global travel demand and increased competition.