Separately, fellow ratings agency Moody’s said on Thursday night it had placed Qantas on negative watch but that it was maintaining its Baa3 investment grade rating in the interim.
Downgrading Qantas’s prized investment rating is expected to result in higher interest bills for the airline.
“A downgrade was not unexpected following yesterday’s market update. 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,” Qantas chief financial officer Gareth Evans said in a statement.
“The Qantas Group retains a strong financial position, including a large cash balance and a significant asset base. The cost cutting and structural review we announced yesterday is aimed at leveraging these strengths to ensure the Qantas Group continues to deliver for its shareholders and customers.
“It remains business as usual across the Qantas Group.”
Qantas now says it will provide an update of its structural review in February.
The downgrading announcement came after Qantas had earlier on Friday placed its shares in a trading halt.