Reuters
- S&P Global Ratings slashed Delta Air Lines’ long-term rating to junk status Tuesday, citing weaker traffic due to the coronavirus pandemic.
- “While the company is reducing its capacity and some associated costs, and will benefit from the steep decline in oil prices, we expect these supporting factors to be more than offset by its much weaker traffic,” S&P analyst Betsy Snyder wrote in the Tuesday report.
- Delta’s ratings remain on CreditWatch, according to the report. S&P expects airline traffic to recover this year and continue to improve in 2021.
- Watch Delta trade live on Markets Insider.
- Read more on Business Insider.
Delta Air Lines‘ long-term rating was slashed to junk status as the airline industry struggles with slow traffic amid the coronavirus pandemic.
On Tuesday, S&P Global Ratings lowered Delta Airlines’ long-term rating to BB from BBB-, saying that the company’s credit metrics are deteriorating faster than the agency expected as the industry deals with fallout from the coronavirus outbreak.
“While the company is reducing its capacity and some associated costs, and will benefit from the steep decline in oil prices, we expect these supporting factors to be more than offset by its much weaker traffic,” S&P analyst Betsy Snyder wrote in the Tuesday report. “However, we expect the volume of passenger traffic to begin to recover later this year and continue improving into 2021.”
Lower bookings will also reduce revenue and cash flow, weakening Delta’s 2020 credit metrics from S&P’s expectations and the company’s 2019 results, according to the report.
The lower rating comes after S&P put Delta and American Airlines on CreditWatch on March 16, citing the coronavirus outbreak. It also downgraded its outlook on United Airlines.
Delta remains on CreditWatch for the time being, and S&P will resolve the rating as it learns more about how the coronavirus impacts the airline’s financial position.
This is a breaking news story. Check back for updates.
Leave a Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
