Qantas shares plunge on S&P move

Shares in flagship Australian airline Qantas dropped below Aus$1 (98.5 US cents) Friday for the first time since the carrier's float in 1995 after it was put on credit watch by Standard & Poor's. The embattled airline's stock plunged as low as 96.2 cents -- a fall of more than nine percent -- after S&P put its BBB/A-2 investment-grade rating on credit watch negative following warnings this week of a huge profit slump. It is the first time Qantas has dropped below the Aus$1 mark since the formerly state-owned airline was floated on the Australian Stock Exchange in 1995 for $1.90 a share. The carrier was trading at a peak of around Aus$6 just five years ago, before its shares were battered by the global financial crisis in late 2007, almost halving in value. S&P said it had put the "Flying Kangaroo" on credit watch "with negative implications" after warnings this week that its full-year profit could dive by up to 90 percent on the back of steep losses in its international arm. Fellow ratings major Moody's downgraded the airline's long-term senior unsecured rating to Baa3 from Baa2 with a stable outlook back in January, citing high fuel prices, strong competition and difficult operating conditions. Qantas expects underlying profit before tax of Aus$50-100 million compared with Aus$552 million in the previous year, due to soaring fuel costs and worsening global conditions driven by the European debt crisis.