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Fitch drops Delta to junk status

Apr. 10, 2020 10:24 AM ETDelta Air Lines, Inc. (DAL) StockDALBy: Clark Schultz, SA News Editor73 Comments
  • Fitch Ratings drops its credit default rating on Delta Air Lines (NYSE:DAL) to BB+ from BBB- and assigns a Negative outlook. Some key snippets from the ratings agency's report are posted below.
  • "Though Delta remains a stronger credit than its network peers, debt raised to sustain liquidity through the pandemic will drive credit metrics outside of a range supportive of investment-grade ratings at least through 2021 and likely into 2022."
  • "Delta has already taken significant actions to raise liquidity as demand has fallen, and Fitch believes that the company will have sufficient liquidity when paired with government grants to manage through the crisis."
  • "We anticipate that material reductions in workforce will be necessary beyond the six months covered by the CARES act as the airlines adjust to operating at a reduced size for at least the next two years."
  • "In all, Fitch expects Delta to borrow more than $8 billion during the year, which is essential for near-term liquidity, but will raise leverage by more than a turn over prior expectations when combined with our forecasts for a smaller top line over the next several years."

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