Dec 20 - Standard & Poor's Ratings Services said today that its
'BBB-/Stable/A-3' issuer credit rating on Qantas Airways Ltd. is
unaffected by the regulator's draft determination authorizing Qantas and
Emirates Airlines (not rated) to coordinate their operations for an initial
period of five years. While the final decision is not expected until March 2013,
the Australian Competition & Consumer Commission (ACCC) has indicated its
overall satisfaction that the public benefit from the airlines' partnership
outweighs any public detriment.
We view the Qantas-Emirates partnership as positive from a credit perspective.
The wide-ranging agreement substantially addresses the declining market share
and profitability of Qantas' European network and allows Qantas to more
appropriately service its Asian network. Nevertheless, we do not view the
partnership as a panacea. The challenges facing Qantas are largely structural
and the partnership does not diminish Qantas' need to pursue an independent
long-term strategy to manage its cost base.
The rating on Qantas does not depend on final regulatory approval of the
partnership. Should the draft determination be overturned, we view Qantas as
having sufficient flexibility within its current rating to pursue alternate
strategies. We also view favorably Qantas' existing initiatives to improve the
return on its international operations.
Standard & Poor's (Australia) Pty. Ltd. holds Australian financial services
licence number 337565 under the Corporations Act 2001. Standard & Poor's
credit ratings and related research are not intended for and must not be
distributed to any person in Australia other than a wholesale client (as
defined in Chapter 7 of the Corporations Act).