ID :
46726
Sat, 02/21/2009 - 14:29
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http://m.oananews.org//node/46726
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Moody's lowers Qantas' credit rating
Qantas Airways Ltd's credit rating has been downgraded by Moody's Investor Service due the carrier's falling profits amid a decline in demand for travel.
Qantas shares fell 7.5 cents, or 4.29 per cent, to $1.675 on Friday after Moody's
downgraded its long-term investment grade rating from Baa1 to Baa2 with a stable
outlook.
Qantas chief executive Alan Joyce said Moody's confirmation the business was still
an investment grade credit rating with a stable outlook affirmed Qantas' strength.
"Qantas is one of the few airlines in the world with an investment grade credit
rating and some of our competitors have fallen below this level because they have
found it hard to reposition themselves in such a tough economic environment," Mr
Joyce said.
Moody's senior analyst Ian Lewis said in a statement that Qantas' credit profile was
adversely impacted by relatively high debt and strained profitability and cash flow,
putting pressure on the rating at a time of worsening industry fundamentals.
Mr Lewis noted that Qantas had taken a number of measures to mitigate these
pressures including capacity reductions, reallocation of routes between Qantas and
Jetstar, and the recent equity raising of $500 million.
But he said the sharp fall-off in consumer demand for air travel, as a result of the
global economic crisis has outweighed the beneficial effect of these actions.
Qantas' Mr Joyce said the aviation sector was experiencing a high degree of
volatility worldwide, and Qantas has had to confront that.
Mr Joyce said Qantas had increased its focus on earnings preservation and
conservative cash management, while being careful to continue its strategy of
restoring core brand strengths in quality product, operational performance and
safety.
This month, Qantas posted a 66 per cent fall in first half net profit to $210
million, compared to the prior first half.
The carrier has recently reduced capacity, reallocated routes between brands, Qantas
and Jetstar, and has undertaken an equity raising of $500 million.
Qantas shares fell 7.5 cents, or 4.29 per cent, to $1.675 on Friday after Moody's
downgraded its long-term investment grade rating from Baa1 to Baa2 with a stable
outlook.
Qantas chief executive Alan Joyce said Moody's confirmation the business was still
an investment grade credit rating with a stable outlook affirmed Qantas' strength.
"Qantas is one of the few airlines in the world with an investment grade credit
rating and some of our competitors have fallen below this level because they have
found it hard to reposition themselves in such a tough economic environment," Mr
Joyce said.
Moody's senior analyst Ian Lewis said in a statement that Qantas' credit profile was
adversely impacted by relatively high debt and strained profitability and cash flow,
putting pressure on the rating at a time of worsening industry fundamentals.
Mr Lewis noted that Qantas had taken a number of measures to mitigate these
pressures including capacity reductions, reallocation of routes between Qantas and
Jetstar, and the recent equity raising of $500 million.
But he said the sharp fall-off in consumer demand for air travel, as a result of the
global economic crisis has outweighed the beneficial effect of these actions.
Qantas' Mr Joyce said the aviation sector was experiencing a high degree of
volatility worldwide, and Qantas has had to confront that.
Mr Joyce said Qantas had increased its focus on earnings preservation and
conservative cash management, while being careful to continue its strategy of
restoring core brand strengths in quality product, operational performance and
safety.
This month, Qantas posted a 66 per cent fall in first half net profit to $210
million, compared to the prior first half.
The carrier has recently reduced capacity, reallocated routes between brands, Qantas
and Jetstar, and has undertaken an equity raising of $500 million.
