Fitch Downgrades United Airlines' IDR to 'B+'; Outlook Stable

Fitch Ratings has downgraded United Airlines' Issuer Default Rating to 'B+' from 'BB-' and revised the Outlook to Stable. The pace of air traffic recovery combined with pressure on the balance sheet will make it difficult for United to achieve credit metrics that support the 'BB-' rating before 2023, prompting the one-notch downgrade to 'B+'. United's balance sheet debt increased by $12.2 billion in 2020, equivalent to approximately 1.5 turns of 2019 EBITDAR. Gross debt may increase further assuming United draws its availability under the government Coronavirus Aid, Relief, and Economic Security (CARES) Act loan. Fitch believes that United's gross leverage could remain near 5x or higher by the end of 2023 which is high for a 'BB' category rating. United will have limited remaining unencumbered assets, leaving the company with reduced financial flexibility compared to prior to the pandemic.