Qantas tops France-KLM in credit-default risk

[SYDNEY] Doubts over Qantas Airways's plan to stem losses pushed bond risk for Australia's biggest carrier above that of Air France-KLM Group, which is attempting a turnaround from near bankruptcy.

Credit-default swaps protecting against non-payment of Qantas's debt have risen by as much as 48 basis points since Feb 28 to 300 on March 13, the highest level since November 2012. It ended last week at 294.5. Risk for Air France-KLM fell to a three-year low on March 7 as the carrier's chief executive officer Alexandre de Juniac, who said that it had been "heading to bankruptcy", refocused on premium fliers.

Qantas, named Australia's most highly-regarded brand last year by the Reputation Institute consultancy, has struggled to protect its market share in a price war with Virgin Australia Holdings. A A$2 billion (S$2.3 billion) cost-cutting plan, involving a pay freeze and the lowest capital spending since 1998, may not be enough, according to Kapstream Capital.