Qantas Airways Limited Domestic market pressure
Domestic market pressure: Qantas Airways Limited (ASX: QAN) senior unsecured debt and backed senior unsecured bank credit facility ratings got upgraded by Moody to Baa2 from Baa3. As part of the action Moody’s has also upgraded QAN’ senior unsecured MTN program ratings to (P)Baa2 from (P)Baa3. The outlook on all ratings is stable. However, Moody would consider downgrading the ratings if QAN deviates from its financial framework or if debt to EBITDA exceeds 3.0x on a sustained basis. On the other hand, QAN has confirmed that it expects to report a full-year Underlying Profit before Tax in the range of $1.35 billion to $1.40 billion. Moreover, in the third quarter, QAN has reported 1.4% fall in the group revenue to $3.96 billion and the Group Unit Revenue declined 1.8%. In the third quarter, there is 4.6% growth in the Group Domestic Unit Revenue as compared to the prior corresponding period. The Group Domestic capacity fell 3.7% majorly from the resource sector whose capacity fell 19%. The International market has recovered slightly from the tough conditions, however the downward trend in Group International Unit Revenue is moderating due to the slow capacity growth in the broader market. In the third quarter, there is fall of 5.6% in Unit Revenue year-on-year and there is 2.2% growth in the Group International capacity. Despite an increase in the capacity of Qantas International by 4.8 per cent, this is rise is capped by the impact of previously announced routes servicing the growing Asian market.
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