Qantas troubles continue amid credit downgrade

Qantas troubles continue amid credit downgrade
By admin

Qantas has described the latest downgrade of its credit rating to junk status as "not unexpected" as the troubled carrier vowed to continue to take “tough decisions” to ensure its future viability.

The airline said the decision by Moody’s Investor Services underlined the importance of taking decisive action in a difficult trading environment.

Moody’s downgrade of Qantas’s senior unsecured rating to Ba2, outlook negative, comes a month after the carrier said it would make a loss before tax of between $250 million and $300 million in the first half.

The downgrade, which follows a similar move by Standard and Poor's last month, means it will be more expensive for Qantas to borrow money.

Chief financial officer, Gareth Evans, said the airline has a strong track record of disciplined financial management and stressed it would continue to make decisions “however tough they may be”.

He said it was continuing to work through the accelerated $2 billion cost cutting program.

“The group has made significant progress over the past two years to reduce costs and increase competitiveness, as part of Qantas’ biggest transformation since privatisation,” Evans said.

“However, earnings conditions have deteriorated rapidly in recent months and we now face some of the most challenging circumstances in our history, including an uneven playing field in Australian aviation.

“We continue to talk to the Australian Government about options for resolving this situation.”

Qantas said it will provide an update on its transformation program and its capital and structural review next month.

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