Qantas down to junk status Qantas has been downgraded to junk status just a day after the airline announced the axing of 1000 jobs and and warning it could fall to a $300 million loss in the first half of this year. The airline had entered a trading halt ahead of the announcement that it lost its investment grade credit rating from Standard & Poor's, which downgraded the company to a "BB+/B" rating. The shares opened lower at $1.03 when they resumed trading on Friday afternoon. At 12.59 pm AEDT, they fell 1.4 per cent to $1.055. In freefall: Qantas shares have fallen more than 80 per cent since 2007. Qantas chief financial officer Gareth Evans said the downgrade was "not unexpected" following the airline's update to the market on Thursday. "It highlights the unprecedented pressures that the Qantas Group is facing from several external forces but particularly from an uneven playing field in the Australian aviation market," he said. The Qantas Group retains a strong financial position, including a large cash balance and a significant asset base. He said the airline was continuing discussions with government about the uneven playing field in the local aviation sector and would provide an update on its structural review in February. Following the review, Qantas could decide to sell stakes in assets such as its frequent flyer program or Jetstar. Mr Evans did not detail the consequences of the loss of an investment grade credit rating. On Thursday, Qantas shares plunged 11.2 per cent, their biggest one-day loss in almost 18 months, to $1.07 after the airline announced it would lose up to $300 million in the first half of the financial year. S&P had rated Qantas at BBB-minus - the lowest investment-grade credit rating - but had not placed it on negative watch for a potential downgrade. The downgrade means Qantas could face the prospect of losing hundreds of millions of its $2.8 billion cash balance, as the transfer of revenue from credit card companies for transactions such as ticket sales is delayed because of the lower rating. The airline could also face a $100 million-plus rise in its annual interest bill, higher leasing and hedging fees and the loss of some investors unable to invest in companies rated "junk." Moody's on Thursday evening placed Qantas on negative watch but maintained its Baa3 rating - the lowest investment grade - for the time being. Qantas chief executive Alan Joyce on Thursday would not reaffirm that the airline would keep its investment-grade credit rating, saying that was up to the ratings agencies. Qantas has been placing increasing pressure on Tony Abbott's government to guarantee the airline's debt, but so far the Coalition has held back. ""Moody's has stated government support would be credit positive for Qantas. Government commentary reported in the media appears to suggest taking a 5-10 per cent ownership stake in Qantas is currently the preferred option over an explicit government guarantee or letters of comfort,"" said UBS analyst Simon Mitchell. It has been a rough six years for Qantas investors, who have seen the company's share price fall more than 80 per cent from $6.06 in 2007. Ratings agencies like S&P rate organisations as a credit risk using a system that starts at AAA for the likes of the Australian government. The lowest S&P "investment grade" rating is BBB+.The BB+/B rating given to Qantas is one notch lower, meaning its rating is "junk" or sub-investment grade. with Max Mason