Qantas Plunges to Record Low With $390 Million Loss Forecast

Qantas Airways Ltd. (QAN), Australia’s largest carrier, closed at its lowest level since a 1995 privatization as analysts forecast a record loss amid a market share fight with Virgin Australia Holdings Ltd.

The stock fell 3 percent to 96.5 Australian cents in Sydney, half a cent below its previous record low last June. Net losses in the year ending June will hit A$428 million ($390 million), according to the average of six analyst estimates compiled by Bloomberg, the second annual loss for the Sydney-based company since the privatization.

Qantas lost its investment-grade credit rating on Dec. 6 from Standard & Poor’s after the company said it would have negative free cash flow over the year to June, meaning it will need to increase debt or sell assets or new shares to pay for new equipment. Yields, a measure of ticket prices, will fall to their lowest level in at least a decade as Qantas and Virgin add more flights than travelers want.

“The market is of the view that they need to raise equity,” Peter Esho, chief market analyst at Invast Financial Services Pty., said by phone earlier today. “Debt is probably a bit too high, which will need to be funded by selling something.”

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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