SYDNEY: Shares in flagship Australian airline Qantas dropped below A$1 (98.5 US cents) for the first time since the carrier's float in 1995 after it was put on credit watch by Standard & Poor's (S&P).
The embattled airline's stock plunged as low as 96.2 cents a fall of more than 9% - after S&P put its BBB/A-2 investment-grade rating on credit watch negative following warnings this week of a huge profit slump.
It closed down 8.5% at 97 cents on a broadly weaker market.
It is the first time Qantas shares have dropped below the A$1 mark since the formerly state-owned airline was floated on the Australian Stock Exchange in 1995 for A$1.90.
The carrier was trading at a peak of around A$6 just five years ago, before its shares were battered by the global financial crisis in late 2007, almost halving in value.
S&P said it had put the “Flying Kangaroo” on credit watch “with negative implications” after warnings this week that its full-year profit could dive by up to 90% on the back of steep losses in its international arm.
The ratings giant said the downgraded earnings projections were “below our expectations” and Qantas' BBB/A-2 grade was on watch pending a full review of the airline in the next 90 days.
“In our view, the magnitude of the losses from (the) Qantas international business underscores the difficulty in turning around the segment (mainly European and Asian routes),” S&P said in a research update.
“We therefore consider that the group's business risk profile would weaken if the airline's international market position and earnings do not recover within a reasonable timeframe,” it added.
Fellow ratings major Moody's downgraded the airline's long-term senior unsecured rating to Baa3 from Baa2 with a “stable” outlook back in January, citing high fuel prices, strong competition and difficult operating conditions.
The troubled airline, hit by not only high fuel bills but industrial unrest that culminated in the grounding of its entire fleet for nearly two days in October, warned of a huge profit slump in the year to June 30. - AFP