Under the amendments, the Company is required to maintain Total Net
Funded Debt to EBITDA Ratios (as defined therein) of: less than or equal to 3.50 to 1 for each fiscal quarter up to and including the fiscal quarter ending September 30, 2017; less than or equal to 3.35 to 1 for the quarter ending December 31, 2017; less than or equal to 3.25 to 1 for each fiscal quarter thereafter, up to and including the fiscal quarter ending June 30, 2018 ; and less than or equal to 3.00 to 1 for each fiscal quarter thereafter.
"Delta will likely make further reductions in
funded debt and interest expense, which will help offset pressure on earnings and operating cash flow that will come when fuel prices rise," added Root.
Moreover, the speculative-grade ratings are unlikely to change over the medium term as implied by the "stable" outlook on expectations the positive trends will continue and the company will use some of its free operating cash flow to cut its
funded debt over the near term, the service added.
Calls to the government
funded debt advice telephone service, the National Debtline, have increased by 40 per cent since 2007, and demand for Business Debtline, the service specifically for business, has doubled.
To determine the maximum debt capacity of a company, issuers and investors will consider a ratio of total
funded debt to earnings before interest, taxes, depreciation and amortization (EBITDA) of 4.0 as a reasonable starting point.
