Moody's has flagged a possible downgrading of Qantas's credit rating after the airline revealed it expected a half-year loss of up to $300 million.

The rating agency said a review of the Qantas' credit rating was also prompted by the airline's "accelerated cost reductions and a capital expenditure and structural review in response to deteriorating market conditions".

Qantas announced on Thursday it would shed at least 1000 jobs as it works to save $2 billion over the next three years, after announcing an expected loss of $250-$300 million for the six months to December 2013.

Qantas' shares dropped 14.5 per cent to $1.06 as of 1235 AEDT on the news.

Moody's said the review was with a view to a possible downgrade of the airline's Baa3 rating.

"The rating action reflects the material downward pressure on Qantas's credit metrics due to declining yields," Moody's vice president, Arnon Musiker, said in a statement.

"While the Baa3 rating reflected these conditions, the extent of the announced profit downgrade, and the potential impact on the 2014 full year performance, is outside the rating expectation."

Mr Musiker added that the "challenging operating conditions" could mean Qantas' credit profile was no longer "consistent with the current ratings".

Qantas is Australia's largest domestic carrier, with an estimated total domestic market of 66 per cent.

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