Ratings agency Standard & Poor’s has affirmed its BB+ long-term issue rating and removed its creditwatch with negative implications on Qantas Airways.
It has also assigned a recovery rating of ‘3’ to the airline, reflecting its expectation of a meaningful recovery for creditors in the event of a payment default.
“The ratings reflect our view of the airline’s leading domestic market position, the enduring value of the Qantas brand, and our assessment that the business would retain more value as a reorganized operating entity than in liquidation,” says S&P.
In December last year S&P downgraded Qantas’s long term rating from BBB-/A-3 to BB+/B with negative implications after the carrier announced that it would record an underlying loss before tax of up to $300 million (A$263 million) for the six months to 31 December.
Earlier this year Moody’s Investor Services also downgraded Qantas’s rating to Ba2, with the agency noting that the domestic market has structurally shifted away from Qantas more in favour of competitor Virgin Australia.