News
Once prominent Qantas Airways facing hard times
Dec. 9, 2013, Sydney, Aus. - Qantas Airways' credit rating was downgraded to junk status Friday, one day after the beleaguered Australian carrier said it would slash 1,000 jobs and suffer half-year losses of at least 250 million Australian dollars ($225 million).
December 9, 2013 By The Associated Press
Standard & Poor's cut the airline's rating to BB+, which is below investment grade, citing the airline's losses.
"A downgrade was not
unexpected," Qantas chief financial officer Gareth Evans said in a
statement.
"It highlights the unprecedented pressures that the Qantas
Group is facing from several external forces but particularly from an
uneven playing field in the Australian aviation market."
Qantas is hoping that regulators will
throw it a lifeline by easing restrictions that currently limit foreign
ownership in the airline to 49 per cent. Rival airline Virgin Australia
is not subject to the same restrictions.
On Thursday, Qantas said
it expects to post pre-tax losses of between AU$250 million and AU$300
million for the six months ending Dec. 31, due to lower demand, a strong
Australian dollar and steep fuel costs.
In a bid to save AU$2 billion over three
years, the airline plans to axe at least 1,000 jobs within 12 months,
freeze pay for all employees and cut the salaries of CEO Alan Joyce and
other executives.
The news sent Qantas stock
plummeting, with the price dropping 11.2 per cent on Thursday.
Shares
were down another 3 per cent on Friday afternoon.
A range of measures to help the airline
have been considered. Earlier this year, Qantas attempted to boost its
struggling international division by signing a 10-year partnership with
Dubai-based rival Emirates.
