Key ratings agency Moody’s says Qantas may still need to take further action to preserve its investment grade credit rating, even if the federal government decides to guarantee some of the airline’s debt.
The agency suggests the airline may need to take further steps, such as deferring aircraft purchases, to shore up its rating.
Moody’s said the success of a government share placement could depend on three factors:
1. Whether the government support relates to certain classes of debt
2. Whether the government support is through letters or verbal support
3. Whether the government takes an ownership stake in Qantas
With its debt currently rated as one notch above junk status, Qantas’ efforts to maintain its 65% domestic market share could be at risk if its debt is downgraded.
Qantas is expected to report a loss when it unveils interim results in February. The Financial Review reports Morgan Stanley and Macquarie Equities estimates the airline to record a loss of over $440 million before tax, although most analysts expect the losses to be smaller.
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