Qantas Airways risks reversing improvements in its perceived creditworthiness after grounding its fleet amid a labour dispute.
Credit-default swaps tied to Qantas jumped 14 basis points to 269 yesterday, the biggest increase in almost a month, according to data provider CMA.
The contracts had dropped 50 basis points last month as of October 28 and were declining at a faster pace than global peers, with an index of airlines worldwide falling to 604 from 621 on September 30.
"The uncertainty over longer-term reputational damage this has created for Qantas is heightened," said Vivek Prabhu, an asset manager at Perpetual in Sydney. They face "increased competition from international airlines and domestically from Virgin Australia, who are chasing the more lucrative business traveller".
Qantas' debt rating may be lowered by Moody's Investors Service after the airline stranded about 80,000 people by grounding 108 planes on October 29. The carrier, whose net income slumped 83 per cent in the six months to June 30 after natural disasters reduced travel, is among Australian companies hampered by the developed world's highest interest rates and a record high currency.
