Moody's Investors Service lowered the long-term senior unsecured rating of Qantas Airways (QF) to Baa3 from Baa2 on Tuesday. While the rating agency also lowered the short-term rating to P-3, from P-2, it said the airline’s outlook is stable and has not lost its investment grade rating. QF is one of only three airlines to have an investment grade rating.
Moody's VP and senior credit officer Ian Lewis said in a statement that "the ratings downgrade reflects Moody's expectation of ongoing pressure on Qantas' credit profile from the combined effects of high fuel prices, strong competition and difficult operating environment.”
"Qantas' credit profile had been subject to ongoing pressure over several years and more particularly since March 2011 when the outlook was changed to negative. These factors are behind the rating downgrade," Lewis said.
However, QF reaffirmed its strong financial position in a statement to the Australian Stock Exchange late Tuesday.
“The group’s credit rating with Moody’s remains investment-grade at Baa3/stable. With operating cash flow strengthening this financial year, a cash balance of more than A$3 billion ($3.3 billion) and the ability to adjust capital investment as appropriate, the Qantas Group remains in a strong funding position,” the airline said.
“The group has mandated financing in place for its 2011/12 aircraft deliveries and intends to fund the balance of its future capital commitments from operating cash flow, cash reserves and available debt.”
QF added that there had been “a significant deterioration in the global aviation operating environment over the past 12 months. Fuel prices have reached the high levels of 2008 and remain at elevated levels, adding around A$450 million to the group’s fuel bill in the first half of 2011/12, and the sovereign debt crisis in Europe has brought further uncertainty to global travel markets.
Article Source : ATW Daily News
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