Qantas credit rating downgraded to 'junk' status

Australian airline Qantas has had its credit rating downgraded to 'junk'.

Moody's, the second largest ratings agency to do so in a month, cited a sharp deterioration in the airline's core domestic business, due to aggressive competition from rival Virgin Australia.

According to news.com.au, Moody's senior vice president Ian Lewis said that Qantas' business risk and financial leverage would remain at elevated levels and inconsistent with an investment grade rating.

Standard and Poor's also downgraded Qantas's rating to junk status last month.

Just a day before S and P's rating the airline announced the axing of 1,000 staff and warned that it could post a 300 million dollars first half loss.

Moody's has casted doubt on Qantas' ability to repay its debt, downgrading the airline's rating to a below investment grade Ba2 from Baa3 with a negative outlook.