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Moody's Cuts Qantas' Credit Rating
Moody's cut its rating of Australia's Qantas Airways by one notch to Baa3, citing pressure from high fuel prices, strong competition and a difficult operating environment. Moody's said its expectation for Qantas debt to EBITDA staying above the 3.75x Baa2 rating threshold for at least the next two years and the absence of adequate levels of free cash flow contributed to the rating cut.

Despite the rating cut, Qantas, along with Southwest Airlines, are the only two global airlines boasting the investment grade rating. "We expect Qantas's financial profile to remain outside the range required for the previous Baa2 rating, particularly over the next several years as it undergoes significant fleet re-investment", said Ian Lewis of Moody's.

Qantas, in a statement after the Moody's move, reaffirmed its strong financial position. "With operating cash flow strengthening this financial year, a cash balance of more than USD$3 billion and the ability to adjust capital investment as appropriate, the Qantas Group remains in a strong funding position," it said. (Moody's)

(published on 02/01/12)

 

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