Yahoo Finance Qantas in trouble over on-time performance at Heathrow
Qantas seems to have run into turbulence in Britain over its slipping on-time performance at London’s Heathrow Airport.
In an internal memo obtained by The Australian Financial Review, the airline has warned its staff and crews that it might lose its valuable landing slots at Heathrow if performance doesn’t improve.
The memo, sent out by Captain Martin Gardiner - Qantas’ manager of base operations at Sydney – says the airline has been handed out an official warning.
“As a result of our performance, London airport has given Qantas an official warning; meaning that we could be fined £20,000 [$AU for each non-compliance of our slot time, or worse lose our slot.”
“We have been asked to advise Heathrow what our plans are to improve this performance. All areas of the business including flight operations are now monitoring the performance of these services very closely so that we can improve our performance and retain our landing slots in [London].”
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Qantas has also announced it will again fly direct from Perth to Singapore from late June, after deciding to shelve the route in May last year.
The five return-flights a week will commence on Friday, June 26 and are expected to depart from Perth at noon and return at 6.25pm WST.
In 2012, Qantas shifted its operations to Dubai from Singapore and severed ties with British Airways for a high-profile alliance with Emirates.
Credit rating outlook improves
In February, Qantas’ credit rating outlook was upgraded for the first time since Standard & Poor's reduced the rating to junk status.
The ratings agency said it expected Qantas to maintain its market dominance over Virgin Australia, while reaping the benefits of sharp falls in oil prices and the Australian dollar.
Standard & Poor's has maintained the BB+ credit rating it placed on Qantas in December 2013, leaving it in the junk zone, but upgraded its outlook from negative to stable.
"We expect Qantas to maintain a dominant position within the domestic market and really, the BB+ stable credit rating largely rests on that assumption," S&P credit analyst Graeme Ferguson said.
"We don't forecast a demand-led recovery, however we do believe that lower fuel prices, the more benign domestic market conditions and the low Australian dollar should translate through to improved credit metrics for the airline," Mr Ferguson said.
S&P is expected to maintain its outlook for the next 12 to 18 months but Mr Ferguson said a medium to longer-term upward revision would be considered "if there were evidence that Qantas had a more robust and versatile operating platform".
He didn't say when Qantas would return to investment grade, but an improvement in the operating funds to debt ratio could see its outlook raised to positive.
Rival credit ratings agency Moody's also has Qantas below investment grade.
