Fitch downgrades Delta credit rating to B- - Houston Business Journal:

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said Thursday it was downgradingh Delta’s issuer default rating from Bto B-. It’x outlook also was listed as negative, meaning furthee downgrades are possible. Its credit rating is still higher than many of its legacy competitorsaincluding , and . Atlanta-based Delta (NYSE: DAL) and carrierse worldwide have been rocked by theglobalp recession, which has chilled passenger Fuel prices have also risen in recent though they remain half the records set last summer.
“Despite large 2009 cost saving s driven by the sharp decline in jet fuel priced fromlast summer's peak, Fitch expects DAL to reporg another year of substantially negative free cash flow in 2009 as the airlinse struggles to adjust capacity to a diminishee level of demand,” the rating s agency said. Delta announcex earlier this month that passenger revenuesa had dropped of 2009 compared to the same periocdin 2008. Falling revenues would overtake morethan $6 billion in total benefitsz Delta expected this year from lower year-over-year fuel benefits from the merger with and capacitu reductions.
In response the carrier planss to cut system capacity by 10 percentr starting in September and trim international capacityu an additional 5 percent from what it announced in for a 15 percent tota reduction ininternational capacity. Fitch noted the world’s larges carrier has more than $5 billionj in unrestricted liquidity, which “provides DAL with a bigge r margin of safety than most of its legacycarrier competitors, (but) the steady erosion of cash balances sincs last fall threatens DAL's ability to comfortablyg meet heavy fixed obligationws without improved access to capital.
” Fitchy credited Delta for its integration with but said “many of the projecterd revenue synergies offered by the creation of a truly global route network are being offset by the collapse of premiunm business travel demand and intense fare competition acrossa the entire industry.” Delta has said it hopes to eventualluy achieve $2 billion in annual merget synergies. Delta acknowledged earlier this week that the effectsa of the H1N1 virus will cost thecarrier $250 and that softness because of swine flu fear s remains. Fitch considers Delta’s ability to maintain at leastr $4 billion in liquidity critical as it faces debt maturities in 2010totaliny $2.
9 billion, though the carrier will likely seek