Fitch has become the latest top ratings firm to upgrade Delta and give the airline a "positive" outlook.
The firm rated Delta just short of investment grade, a key goal of the company as it continues its post-merger revitalization.
"The ratings upgrade reflects on-going improvements to Delta's balance sheet, continued solid operating performance, better than expected free cash flow, and successful efforts to combat operating cost inflation," London and New York-based Fitch wrote in a press release issued this afternoon. The new rating is BB+.
In addition to validating Delta’s performance, an improved credit rating means more flexibility and lower costs for the airline when it comes to financing expensive capital projects such as aircraft and airport improvements. This is critical to Delta as the company continues to reinvest in its business, and it will allow the airline to continue to improve the customer experience.
“The Fitch upgrade serves as further evidence that the improvements in our balance sheet and the strength of our business model are being recognized,” said Ken Morge, Delta’s Vice President and Treasurer. “Delta is uniquely positioned among high performing S&P industrial companies, and an investment grade rating is in our line of sight.”
Fitch's upgrade comes just two months after Standard & Poors, another of the top credit rating agencies, also upgraded Delta’s rating to a position just below investment grade. A month prior, the third of the "big three" ratings firms, Moody's, also upgraded Delta with "outlook positive."
In explaining the upgrade, Fitch also cited trends in the industry: consolidation among the legacy carriers and capacity constraint in particular, “which have led to an improved risk profile and better profitability for the industry as a whole.”
Like S&P, Fitch noted Delta’s paying down of its debt while returning cash to shareholders. Over the past two years Delta has reduced its debt by $10 billion while returning over $3 billion to shareholders. The company also has paid out $1.6 billion in profit-sharing to employees for 2013 and 2014.