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Delta Airlines was upgraded to BB+ from BB by S&P on several positive updates. The rating agency believes that Delta is likely to “meaningfully improve its credit measures in 2023, with further strengthening anticipated in 2024”. They expect Delta to generate “sharply higher” earnings and cashflows in 2023 thanks to growth in capacity and margin expansion. This improvement is also likely to lead to quicker debt repayments and further strengthen its credit measures. S&P estimates Delta’s fund from operations-to-debt ratio to be at ~30% in 2023, well above its previous threshold of over 20%. Besides, strong booking trends, pent-up demand and a positive outlook for the US airline industry only add to Delta’s financial positives. Delta is just a notch away from being a rising star.
Delta’s bonds were trading slightly higher with its 7.375% 2026s up 0.5 points to 102.88, yielding 6.01%.