BUSINESS-ECONOMY
Fitch Ratings said it upgraded the credit rating of Delta Air Lines Inc. to investment grade, reflecting significant improvement in the carrier's balance sheet over the past three years. The Atlanta-based airline was cut to junk status during the pandemic when a steep decline in air travel severely battered the industry. A junk credit rating makes it harder and more expensive for companies to raise capital. Fitch Ratings said it upgraded the credit rating of Delta Air Lines Inc. to investment grade, reflecting significant improvement in the carrier's balance sheet over the past three years. The Atlanta-based airline was cut to junk status during the pandemic when a steep decline in air travel severely battered the industry. A junk credit rating makes it harder and more expensive for companies to raise capital. The airline has been working on reducing its debt and regaining its investment-grade rating after the pandemic. Fitch lifted its rating on Delta to 'BBB-' from 'BB+', with a stable outlook. While the carrier has already been assigned an investment-grade rating by Moody's, it sits in the junk category under S&P. Fitch has remarked that the credit metrics of Delta vastly improved post-pandemic, wherein the company reduced gross debt and operating leases by about $11 billion over the past three years. The agency foresees that, through 2024, exceptionally robust travel demand will back the generation of free cash flow at the company. It is also expected that the company will bring down its unencumbered assets to $30 billion by year-end. Despite this, just last Thursday, Delta had evaluated a lower-than-anticipated third-quarter profit due to excess industry capacity weighing down on lower-end market airfares. Yet Fitch remains optimistic as it expects an increasing number of corporate travel bookings and sustained demand for premium travel to put Delta in a position to maintain its status as one of the most profitable airlines. In summary, Fitch Ratings upgraded the credit rating of Delta Air Lines to an investment grade in recognition of the airline's recent efforts to strengthen its financial foundation. This has been a core strategy of debt reduction and capital generation that will underpin the place for sustained profitability in the presence of healthy travel demand. None
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