Qantas Credit Rating Slashed By Moody's - Gulf Business
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Qantas Credit Rating Slashed By Moody’s

Qantas Credit Rating Slashed By Moody’s

Dubai-linked airline recently announced the loss of 1,000 jobs.

Moody’s Investors Service has slashed Qantas’ credit rating to below investment grade, the second ratings agency to do so.

The Australian airline, a partner of Dubai’s Emirates, issued a profit warning last month and announced the cut of 1,000 jobs.

Moody’s cut the carrier’s rating to Ba2 from Baa3 with a ‘negative’ outlook. Standard & Poor’s recently made a similar downgrade on the carrier. The downgrade sends a warning to investors.

Profits on Qantas’ domestic operations, its biggest growth contributor, fell 21 per cent in the last financial year.

“The downgrade to Ba2 reflects a worse than expected impact on Qantas’ credit profile of a marked sharp deterioration in the company’s core domestic business, which has been a key supporting factor of its previous investment grade rating,” said Ian Lewis, vice president at Moody’s.

A Moody’s statement added a “sharp deterioration in the company’s core domestic business” was a key reason for the downgrade.

Qantas is facing stiff competition on its domestic routes from its local rival Virgin Australia, which is partly owned by the UAE’s Etihad Airways.

Emirates announced a partnership with Qantas 12 months ago. The Australian carrier reported A$6 million net profit after tax for the 2012/2013 financial year. Underlying profit before tax increased from A$95 million to A$192 million.


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