Qantas faces possible ratings cut

RATINGS agencies have placed Qantas Airways on review for a possible downgrade following the grounding of the entire Qantas fleet over the weekend.

Moody's and Standard and Poor's today revised their outlook for the airline after Fair Work Australia (FWA) terminated all industrial action involving three unions.

Moody's said Qantas' Baa2/P-2 ratings had already been "weakly positioned" within the rating due to challenging operating environment amid tensions on the industrial relations front.

"While the current decision to terminate industrial relations actions by Fair Work Australia will potentially lead to enhanced certainty of industrial outcomes between Qantas and the three unions concerned, incremental earnings loss and impact on Qantas forward bookings, are likely to exert additional pressure on the ratings", Moody's senior credit officer Ian Lewis said in a statement.

Standard and Poor's Ratings Services revised Qantas' outlook from stable to negative on higher medium-term business risk while affirming the BBB/A-3' corporate credit rating.