US airline debt and balance sheets Part 1: American, Delta and United opt for nuanced strategies

Delta Air Lines reached a milestone in Feb-2016 when it achieved investment grade status with ratings firm Moody's. It is a goal the airline has been working towards for some time, reflected in its efforts to drive down debt during the last few years. Among the three large global US network airlines, Delta is the first to have its credit ratings restored to investment grade.

American and United have each made solid progress in their balance sheet management and debt reduction during the last couple of years, and United has cited reaching an investment grade rating as a specific goal. American obviously would also like to rise to that status, but seems in less of a hurry to attain investment grade given the current borrowing rates the airline is enjoying.

Both United and American have outlined liquidity targets as part of their respective balance sheet management, and American's levels will settle above its rivals for the foreseeable future, which the airline believes is necessary given its leverage. The company's debt ratios are larger than its peers; but American has concluded borrowing at current interest rates is in its shareholders best interest.