Qantas shares drop below Oz dollar mark following S&P review

Published:  11 Jun at 6 PM

For the first time, shares for Qantas Airways have dropped below the Australian dollar mark, following ratings agency Standard & Poor's decision to review the airline for a possible downgrade.

Stakes in Australia's biggest carrier dropped 8.5 percent to 97 cents, prior to slightly recovering to 99 cents. The airline said that profits could fall by 90 percent due to mounting losses with international routes. The carrier has struggled with lowered demand and increased fuel prices.

The company’s shares have dropped by nearly one-third in four days of continued losses. According to figures compiled by Bloomberg news, this has erased 1 billion US dollars off the market capitalisation from $3.2 billion to $2.2bn.

Last Tuesday, Qantas announced that international losses would slash the airline's profit this fiscal year to as little as A$50 million. The firm blamed the deteriorating aviation landscape on the EU economic crisis, as well as its skyrocket jet fuel bill.

S&P announced that the earnings projections were not up to expectations as it put the airline on credit watch. The ratings agency says Qantas' BBB investment rating, two notches above junk status, will undergo an evaluation during the next 90 days.

If the carrier is downgraded to junk status, the decision would make debt funding pricier, and potentially damage the firm’s plans to expand in Asia.