Fitch Ratings downgrades Delta Air Lines to junk

As governments from across the globe continue to resort to lockdowns and restrict people to their homes to minimize the fast spread of COVID-19, the global travel industry has been brought to its knees. Airlines and aircraft manufacturers are currently facing unprecedented financial challenges due to the ongoing Coronavirus pandemic.

Several airlines have announced cost-cutting strategies in recent weeks including layoffs, slashing production, canceling flights, or suspending dividends. In its announcement on Thursday, Delta Air Lines (NYSE:DAL) said that as many as 35,000 of its employees have so far volunteered for the airline’s recently introduced scheme of voluntary unpaid leaves.

Delta Air Lines Offers Enhanced Benefits And Longer-Term Unpaid Leaves To Employees

According to the Chief Executive Officer, Ed Bastian, the voluntary unpaid leaves are aimed at cutting costs and maintaining the financial stature of the U.S carrier amidst the ongoing health crisis. Bastian further added that the company seeks to further expand on the number of volunteers in the upcoming weeks.

Bastian highlighted in his memo to Delta’s workers that the company will now offer enhanced benefits to its employees who volunteer for unpaid leaves. The term of unpaid leaves, he added, is also now expanded to up to twelve months. Such a move, as per the CEO, will help entice more of the Delta’s employees into volunteering while offering sufficient time for the company to recover.

The flu-like virus has so far infected more than 475,000 people in the United States and has caused over 17,000 deaths. Friday’s report showed that the state of New York alone in the U.S currently has more confirmed cases of the deadly virus than any other country as a whole.

Airlines To Start Getting A Response On Their Applications For Financial Aid From Friday

Delta Air Lines is among the list of U.S carriers that have applied for government aid to cushion the economic blow from COVID-19. According to the U.S Treasury Secretary (USTR), Steven Mnuchin, airlines are expected to get a response on their applications for financial support from Friday.

Following USTR’s announcement, Delta was recorded trading around 4% up in extended trading on Thursday.

At £20 per share, however, the U.S carrier is still trading more than 50% down year to date in the stock market. At the time of writing, Delta Air Lines is valued at £12.50 billion.

Owing to its downward rally that started in late February, Fitch Ratings downgraded Delta Air Lines to junk on Friday.