Fitch Ratings has upgraded Southwest Airlines to 'BBB+' from 'BBB'. The Rating Outlook is revised to Stable from Positive.
The upgrade reflects steady improvements to Southwest's credit profile over the past several years as it worked through the integration of Airtran, paid down debt, and returned credit metrics to prerecession levels. Going forward, Fitch expects Southwest to continue to generate solid free cash flow (FCF), exhibit stable or modestly declining leverage, and maintain its substantial financial flexibility. Southwest's investment-grade credit ratings are also supported by its competitive position in the U.S. domestic market, its strong brand, and its sizeable base of high-quality unencumbered assets.