Qantas Airways, which this week forecast an annual loss, fell below A$1 for the first time since it was privatised after Standard and Poor's put the airline on review for a possible downgrade.
Australia's largest carrier dropped as much as 8.5 per cent to 97 cents, before rebounding to 99 cents as of 2.50pm in Sydney trading. The stock has tumbled as much as 32 per cent since the June 5th earnings forecast. A four-day slump that has wiped out about $1 billion of the stock's market value.
Standard and Poor's put Qantas on review for a possible downgrade after the carrier said losses on international routes may double to A$450 million ($444 million) in the year ending June.
Chief executive Alan Joyce is struggling to revive the overseas unit amid competition from Emirates Airline and other Middle East carriers, slower demand in Europe and higher fuel prices.
"The magnitude of the losses from Qantas' international business underscores the difficulty in turning around the segment," Standard and Poor's credit analyst May Zhong said in a statement. "The group's business risk profile would weaken if the airline's international market position and earnings do not recover within a reasonable timeframe."
Credit default swaps insuring the debt of Qantas against non-payment rose to 375 basis points, near the record-high of 375.1 reached on October 4th.
Losses on international routes will reduce Qantas' underlying profit this fiscal year to as little as A$50 million, the carrier said earlier this week, a 91 per cent drop from a year earlier. Domestic flights, including at budget arm Jetstar, are expected to post a profit of more than A$600 million.
The company expects a full-year net loss, Joyce said this week. Earnings have been hit by higher oil prices, which will help boost annual fuel costs by A$700 million to A$4.4 billion, Qantas said. The price of jet fuel has averaged $127.30 a barrel in Singapore since June 30th.
Bloomberg