This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-25663541
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
Version 0 | Version 1 |
---|---|
Moody's cuts Qantas credit rating to 'below investment' | Moody's cuts Qantas credit rating to 'below investment' |
(35 minutes later) | |
Moody's has become the second ratings agency to downgrade the credit rating of Qantas to below investment grade. | Moody's has become the second ratings agency to downgrade the credit rating of Qantas to below investment grade. |
Last month, Qantas issued a profit warning and announced 1,000 jobs cuts amid strong competition in domestic and international markets. | Last month, Qantas issued a profit warning and announced 1,000 jobs cuts amid strong competition in domestic and international markets. |
Moody's said a "sharp deterioration in the company's core domestic business" was a key reason for the downgrade. | Moody's said a "sharp deterioration in the company's core domestic business" was a key reason for the downgrade. |
Profits at its domestic operations, the biggest contributor to Qantas's growth, fell 21% in the last financial year. | Profits at its domestic operations, the biggest contributor to Qantas's growth, fell 21% in the last financial year. |
Moody's cut the airline's rating to Ba2 from Baa3, adding that the outlook on ratings was "negative". | Moody's cut the airline's rating to Ba2 from Baa3, adding that the outlook on ratings was "negative". |
"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", Ian Lewis, vice president at Moody's, said in a statement. | "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", Ian Lewis, vice president at Moody's, said in a statement. |
The downgrade by Moody's follows a similar cut by Standard & Poor's last month. | The downgrade by Moody's follows a similar cut by Standard & Poor's last month. |
'Will remain challenged' | |
Qantas's international operations have been struggling for some time, hurt by several factors including higher fuel costs, subdued travel demand and increased competition. | |
Its domestic operations have also come under pressure recently, partly because of the success of rival carrier Virgin. | |
Moody's said that Virgin's growth in Australia had "shifted the market dynamic against Qantas in a structural way" and that Qantas's domestic business "will remain challenged". | |
The ratings agency said that Qantas' profit margins were likely to be hurt by its efforts to maintain its domestic market share. | |
Last month, Qantas warned that it expects to make losses of up to A$300m ($271m; £165m) in the July-to-December period - the first half of the current financial year. | |
"The material downturn in Qantas' domestic business also comes at a time when the carrier is grappling with a turnaround in its loss making international mainline business," said Mr Lewis. | |
"As such the business is exposed to execution challenges on two fronts, simultaneously," he added. |
Previous version
1
Next version