Southwest Airlines among three carriers with investment grade rating: S&P Global

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All three are very low or low-cost carriers largely focused on leisure passengers and short-haul flying, and equipped with strong liquidity, the ratings agency said on Wednesday.

With the easing of coronavirus-led lockdowns, there are signs of a rebound in domestic travel, helping budget airlines, although passengers continue to shun international routes.

Airlines operating long-haul international flights including American Airlines (O:AAL), United Airlines (O:UAL) and Delta Air Lines (N:DAL) have been among the worst hit due to the pandemic, forcing them to raise billions of dollars in debt to support costs.

“Pre-COVID-19, just over one-third of our global airlines portfolio was rated at ‘B+’ or lower, and now this has risen to about two-thirds of the total,” S&P Global said.

The ratings agency’s forecast for 2020 global passenger traffic has worsened to a drop of between 60% and 70% from between 50% and 55% estimated at the end of May.

Almost all airlines, including the top three U.S. carriers flying international flights, remain on negative outlook or “CreditWatch negative” by S&P Global, reflecting the extremely weak and uncertain outlook for the aviation sector.