Another Downgrade for Flying Roo as Moody’s Cuts Qantas Rating to Junk
By Vittorio Hernandez | January 9, 2014 5:25 PM EST
The fresh Qantas-Emirates code-sharing deal could spell the end of the national carrier’s international career, analysts said, in return for strong semblance of profitability on the domestic front.
YouTube/World News Planet
It was the second downgrade after Standard & Poor's also lowered to junk status in December Qantas's ratings after the financially troubled airline announced that it would axe 1,000 workers and warned of $300 million loss for the first half.
Besides losing money in its international business, Qantas also suffered a sharp decline in its core domestic business brought about by aggressive competition from rival Virgin Australia.
Ian Lewis, senior vice president of Moody's, explained, "These actions, which include capacity additions, have shifted the market dynamic against Qantas in a structural way."
He added, "As such, we expect that Qantas business risk and financial leverage will remain at elevated levels and inconsistent with an investment grade rating."
The Ba2 below investment grade rating by Moody's on Qantas from Baa3 with negative outlook is an indicator that the agency placed doubt on the ability of the Aussie air carrier to repay its debt. A junk rating could scare potential stock holders from buying shares of a listed company.
Mr Lewis pointed out that Virgin has caused negative structural changes for Qantas and its domestic business would remain challenged by the upstart airline's actions.
Qantas could get back its stable rating if the profitability of its international and domestic operations would improve at levels considered safe to sustain appropriate levels of debt.
To contact the editor, e-mail:
Most Popular Slideshows
- Derek Jeter With The New York Yankees Through The Years [IN PICTURES]
- George Clooney And Amal Alamuddin's Wedding In Venice: Photos Of Groom And His Family, Friends [Slideshow]
- NFL Recap - Week 4: Green Bay Packers 38, Chicago Bears 17 [PHOTOS]
- NFL Recap: New York Giants 45, Washington Redskins 14 [PHOTOS]
Join the Conversation
- Australian Stock Market Report – Afternoon September 29, 2014
- Australian Stock Market Report – Morning September 29, 2014
- Australian Stock Market Report – Midday September 30, 2014
- Australian Stock Market Report – Afternoon September 30, 2014
- Environment Ministry OKs $2.2B North Galilee Basin Rail Project On 23 Conditions
- Forget Nexus 6 Release Date, Android Phones Will Soon Showcase Pure Google Apps & Features
- iPhone 6 vs Moto G 2014: Motorola’s Budget Smartphone Takes On Apple’s Premium Smartphone
- 3 Reasons to Get the Samsung Galaxy Note 4 Instead of the iPhone 6
- $249.99 Motorola Moto 360 Smartwatch's First Promo Out; 'Stone Leather' Replaces 'Gray Leather' - Available In BestBuy [Watch Video]
- BlackBerry Passport Sold Out As Preorders Reached 200,000
- iOS 8 And iOS 8.0.2 Security Flaw Revealed, Anyone Can Easily Bypass Touch ID And Passcode Security Features
- Australia Cracks Down On International Money Laundering Syndicate