SYDNEY: Australian carrier Qantas Tuesday said it remains in a strong funding position with a cash balance of more than Aus$3.0 billion ($3.2 billion) after it was downgraded by Moody's Investors Service.
Moody's lowered the airline's long-term senior unsecured rating to Baa3 from Baa2 with a stable outlook, partly due to higher fuel prices.
The credit ratings agency had placed the airline on review for a possible downgrade in November, immediately after it grounded its entire fleet for nearly two days to end a dispute with labour unions over pay and conditions.
"The ratings downgrade reflects Moody's expectation of ongoing pressure on Qantas' credit profile from the combined effects of high fuel prices, strong competition and a difficult operating environment," Moody's said.
Qantas said that despite the downgrade it was in a strong funding position.
"With operating cashflow strengthening this financial year, a cash balance of more than $3.0 billion and the ability to adjust capital investment as appropriate, the Qantas group remains in a strong funding position," it said.
"The group has mandated financing in place for its 2011/12 aircraft deliveries and intends to fund the balance of its future capital commitments from operating cashflow, cash reserves and available debt."
It acknowledged that soaring fuel prices and the sovereign debt crisis in Europe had hurt its bottom line but said the depth of its businesses gave it the flexibility to manage economic volatility and operational disruptions.
"The group has a clear strategy for the future, based on its strong domestic airline businesses, turning around Qantas international, the continued growth of Qantas Frequent Flyer and targeted expansion in Asia," it said.
Qantas has had a turbulent past few years, hit by not only high fuel bills but a series of strikes that culminated in the grounding of its entire fleet for nearly two days in October.
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