Qantas struggles as Moody's downgrades airline to 'junk'

Australian carrier Qantas said it was facing some of its toughest-ever challenges on Thursday as Moody's downgraded its credit rating to junk, with the airline battling intense competition and spiralling costs.
Moody's cited "a sharp deterioration in the company's core domestic business" following the airline's shock profit warning and announcement of job cuts in December, which had already prompted Standard and Poor's to assign it junk status.
Qantas is now rated Ba2 by Moody's and BB+ by Standard and Poor's, meaning it is considered a "junk" product by professional investors.
It will increase the cost of financing for the carrier and restrict access for investors that do not put their money in lower-rated companies, deepening woes for the cash-strapped airline.
"They are in a complete freeze, worrying about paying interest rather than spending capex on where it should be going -- a new fleet, upgrading facilities, etc," said IG Markets analyst Evan Lucas.