Delta Air Lines, the poster child for the US airline success story in recent years, has seen its credit rating downgraded to ‘junk’ status by S&P Global Ratings.
Delta’s rating was cut two notches to BB from BBB, due to a ‘steep decline’ in ticket revenues.
"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 said.
It expects the recovery to begin ‘later this year and continue improving into 2021.’
Although Delta’s stock price soared by more than 16% on Tuesday, it is still half the value it was a month ago.
The airline has cut passenger capacity by 70% and placed about 10,000 workers on unpaid leave.
Airline stock prices enjoyed a rare boost with hopes increasing that the coronavirus relief package will soon be approved.
United Airlines, American and Southwest Airlines also posted double-digit gains.
