Qantas
shares hit rock bottom
Qantas
shares have slumped below AUD$1.00 (NZD$1.29) capping a horror week
in which AUD$1.1 billion was wiped off the airline's market value.
TVNZ,
8
June, 2012
The
dramatic slide follows the airline's shock profit warning on Tuesday,
caused by the drastic deterioration in the performance of its
international business.
Before
that warning, Qantas shares were trading at AUD$1.42, but have since
lost ground each day, setting new records in the process, to end
Friday's session at AUD0.97 cents.
It's
a far cry from the AUD$1.90 Qantas shares were worth 12 months ago,
and the AUD$5.91 peak they hit in October 2007.
Qantas
expects its international business to post a loss of AUD$450 million
in the 2011/12 financial year, more than double the AUD$216 million
loss in the prior year.
The
overall company's full year profit is forecast be between AUD$50
million and AUD$100 million, down by as much as 91% from the AUD$552
million achieved in the previous year.
Credit
ratings agency Standard & Poor's on Friday reacted to the
airline's renewed outlook, placing the company on credit watch with
the potential of a downgrade.
If
the airline's international business does not improve earnings in a
reasonable timeframe, Qantas' risk profile would weaken, Standard
& Poor's said.
"In
our view, Qantas' international operations are a key factor to the
group's long term competitiveness," S&P credit analyst May
Zhong said in a statement.
If
S&P were to downgrade the airline's credit rating, it would
likely be by one notch from its current BBB rating, the agency said.
Qantas
recently announced plans to split its domestic and international
businesses into separate companies, which fuelled speculation one may
be sold off.
The
drastic drop in the value of Qantas will only add to such
speculation.
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