S&P downgrades Australia's Qantas credit rating

Ratings agency Standard & Poor's Ratings Services on Friday downgraded Qantas Airways' credit rating to BB+, from BBB-.

The BB+ rating is considered as a below investment grade, known as "junk" status.

Standard & Poor's said the downgrade reflected its view that intense competition in the airline industry had wakened the Australian airline's business risk profile to "fair" from " satisfactory," and financial risk profile to "significant" from " intermediate."

"We don't expect Qantas to recover to a credit profile commensurate with a "BBB-" rating in the near term," the rating agency said in a statement.

"We recognize that Qantas has strong financial flexibility and a good track record of responding to earnings pressures through coast cutting and other measures."

The downgrade came a day after Qantas announced plans to cut 1, 000 jobs over the next 12 months and flagged an underlying pre-tax loss of up to 300 million AU dollars (272 million U.S. dollars) for the first half of this financial year.