Delta Air Lines DAL shares are higher on Tuesday, even as S&P Global analysts lowered the company's credit rating to a junk level.
S&P Global Ratings lowered the Atlanta carrier's rating two notches to BB from BBB-, placing the airline's credit in junk territory. BBB- is the credit-rating company's lowest investment-grade rating.
Delta's revenue should decline sharply as the coronavirus pandemic cripples the airline industry, S&P said. Consumers are reticent to travel as the biggest cities across the country restrict people's ability to move around, the firm said.
Delta remains on CreditWatch for possible downgrade, until S&P Global can determine how the coronavirus will affect the company's financial position.
"While the company is reducing its capacity and some associated costs, and will benefit from the steep decline in oil prices, we expect these supporting factors to be more than offset by its much weaker traffic," S&P said.
"However, we expect the volume of passenger traffic to begin to recover later this year and continue improving into 2021."
Delta shares are higher amid the marketwide rally in stocks on Tuesday. The airline's stock at last check was up 16% to $25.77 as U.S. lawmakers inched closer to a deal that would bail out multiple industries with trillions of dollars.
On Monday U.S. stocks had received an initial boost after the Fed pledged to backstop the country's financial system. Equities then slumped into the close after the Senate failed for a second day to pass a massive fiscal stimulus bill of nearly $2 trillion.