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Standard & Poor’s backs Qantas strategy

Standard & Poor’s backs Qantas strategy

Ratings agency Standard & Poor’s has upgraded its outlook on debt at Australian airline Qantas to Stable, from Negative, allowing the carrier to maintain its BBB long-term corporate debt rating.

The Australian flag-carrier is one of a handful of airlines from around the world to maintain an investment-grade rating from the three major credit agencies.

Standard & Poor’s decision follows details from Qantas of its plan to launch two new airlines in Asia over the next two years.

Last month the airline confirmed new low-cost airline Jetstar Japan will be joined by an all new premium Asian carrier.

Qantas also confirmed a $400 million overhaul of existing in-flight entertainment, aircraft interiors and airport lounges will be undertaken to meet changing demands. 

The airline was able to quash short-term takeover talk last month, announcing positive financial results for the year to June 30th.

However, only a buoyant domestic travel market is keeping the airline in the black, offsetting its underperforming international flights business, which posted a AS$200 million loss last year.

“We expect a gradual improvement in the group’s overall performance, in particular its international operation, as a result of these new international strategies,” S&P credit analyst May Zhong said in a statement.

“In our view, these latest strategies are key to the long-term viability of Qantas in such a highly competitive industry and the maintenance of its credit metrics at current or higher levels on a sustainable basis.”