By Hugo Martin
11:37 AM PST, December 6, 2013
Despite a downgrade to its credit rating, Australia's national airline said it remains financially strong and continues with "business as usual."
The Qantas Group issued the statement Friday, one day after Standard & Poor's dropped the credit rating for Qantas Airways to below investment grade, from BBB-/A-3 to BB+/B.
S&P said the downgrade came in response to intense competition from Virgin Australia, which has raised Qantas' financial risk profile from "intermediate" to "significant."
Qantas Group Chief Financial Officer Gareth Evans said the downgrade was not a surprise but added that the airline has a cash balance of $2.8 billion and has launched a $2-billion cost cutting plan over the next three years.
“It remains business as usual across the Qantas Group," he said in a statement.
But part of the airline's cost-cutting efforts include eliminating 1,000 jobs over the next 12 months, the airline announced Wednesday.
The airline has accused Virgin Australia of using foreign capital to increase domestic capacity, creating an "uneven playing field" for Qantas.
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