Delta's current long-term issuer default rating (LT IDR) stands at BBB-, indicating good credit quality, up from BB+, which is considered speculative.
Fitch expects Delta to maintain its earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) leverage in the mid-2x range. The carrier is also anticipated to achieve fixed charge coverage greater than 4x and generate consistent positive free cash flow (FCF), aligning with an investment-grade credit profile.
"Delta also benefits from a solid business profile reflected in its leading position in key markets and strong brand reputation," Fitch stated. "The ratings consider Delta's conservative financial policies, with management consistently prioritizing manageable debt levels."
Achieving an investment-grade rating was a goal set by Delta Air Lines in 2021 as part of its plans to recover from the pandemic. Alongside Fitch Ratings, Moody’s Investor Service has also rated Delta as investment grade. However, S&P Global Ratings currently rates the airline one step below investment grade.
Dan Janki, Chief Financial Officer of Delta Air Lines, described Fitch’s upgrade as a significant achievement reflecting the hard work of the airline’s employees. "We’ll continue to focus on strengthening our balance sheet and our financial foundation as we move forward into the second half of the year and beyond," he said.
During the first half of 2024, Delta reported $30.4 billion in revenue—a 7% increase year-on-year—resulting in an unaudited net profit of $1.3 billion, down 8% from the same period in 2023. By June 30th, long-term debt stood at $14 billion compared to $15.9 billion at the end of 2023; cash and cash equivalents improved from $2.7 billion to $4.1 billion during this period.
In comparison, Fitch Ratings assigned American Airlines Group a B+ rating (‘highly speculative’) and United Airlines Holdings a BB- rating (‘speculative’). These ratings were reviewed earlier this year without any upgrades or downgrades being made.
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