Fitch Ratings has revised Delta Art Lines’ credit rating outlook from stable to positive, and affirmed its BBB- long-term Issuer Default Rating (IDR).
This change is the result of the company’s gross debt reduction of US$12 billion over the last three years, Fitch said. Delta has also made progress towards its conservative financial targets, the agency added, expecting unencumbered assets to reach US$40 billion over the intermediate term.
Delta’s rating is higher than US competitors United Airlines (BB/positive) and American Airlines (B+/stable) due to its favourable leverage maintenance levels and historically strong free cash flow (FCF) profile.
Between 2025 and 2028, Fitch expects Delta to generate positive FCF. Despite poorer results in H1 2025 than H1 2024, the agency believes that EBITDAR margins will stabilise, cash from operations will cover capex of approximately 9% annually, and FCF margins will sit in the low-single digits as a percentage of revenue.
Delta sits below Southwest Airlines (BBB+) due to the latter’s strong net cash position, but anticipated profitability pressures at Southwest have given it a negative outlook.
In Europe, Fitch expects Delta’s gross leverage to be in line with Deutsche Lufthansa’s (BBB-/stable) and slightly above Air France/KLM’s (BBB-/stable). FCF metrics are likely to be better at Delta than at European firms, the agency said.
Delta’s strong brand reputation, growing loyalty and premium-related revenues (up 6% year-on-year in H1) and leading position in key markets support its solid business profile, Fitch noted.
Overall improvements to the industry have also helped Delta, with network carriers reporting an uptick in bookings after economic uncertainty in the second quarter of the year.
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