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Qantas in trading halt amid rating downgrade fears

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(Globalpost/GlobalPost)

Embattled Australian carrier Qantas was placed in a trading halt Friday ahead of an announcement on its credit rating by Standard and Poor's after the airline issued an unexpected profit warning.

Qantas on Thursday flagged a half-year loss of up to Aus$300 million (US$271 million) and said it would axe 1,000 jobs as it struggles under the weight of record fuel costs and fierce competition from subsidised rivals.

The airline's shares plunged on Thursday and a halt was placed on any further trading on the Australian market until Monday ahead of an update by S&P.

"The trading halt is requested pending receipt of information from Standard and Poor's in relation to Qantas' credit rating, which is considered likely to be materially price sensitive," the carrier said.

It follows another ratings agency, Moody's, on Thursday putting the airline's investment-grade Baa credit rating on review for a potential downgrade, saying the forecast conditions were "outside the rating expectation".

Chief executive Alan Joyce on Thursday said the challenges facing the airline were "immense".

"Since the global financial crisis, Qantas has confronted a fiercely difficult operating environment -- including the strong Australian dollar and record jet fuel costs, which have exacerbated Qantas' high cost base," he said.

"The Australian international market is the toughest anywhere in the world."

As well as axing 1,000 jobs, Joyce said he would take a 38 percent pay cut while the airline would conduct a review of spending with top suppliers and put in place a salary and bonus freeze.

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http://www.globalpost.com/dispatch/news/afp/131205/qantas-trading-halt-amid-rating-downgrade-fears