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Country: US
Delta Air Lines
- Sector: Transportation
- Sub Sector: Airlines
- Country: US
- Bond: DAL 5.25 30
- Indicative Yield-to-Maturity (YTM): 4.67%
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Fundamental View
AS OF 14 Oct 2025- Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view.
- Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our O/P view and continue to favor DAL compared to LUV. We are happy to capture the basis between the two.
Business Description
AS OF 14 Oct 2025- DAL is one of the world's largest airlines with a network comparable to UAL and AAL in size and distribution. It is perceived by the flying public as the "most premium" of the Big Three network carriers in the US.
- DAL has an extensive global network of airline affiliations, including Air France/KLM, Virgin Atlantic, Aeromexico, LATAM, and China Eastern.
- DAL management is the most evolved of the US network airlines, previously focused on used aircraft to lower capital costs and setting up full-cycle maintenance programs, buying a refinery to hedge crack spread, and developing non-commodity products including the leading loyalty program.
Risk & Catalysts
AS OF 14 Oct 2025- DAL faces all the industry exogenous risks: geopolitical events, pandemics, oil price volatility, and now recessionary fears.
- The recently weaker dollar may manifest as a headwind to international demand. DAL was able to capitalize on strong Atlantic recovery post-pandemic through its extensive existing network; however, it lost its status as the number one airline on US-Europe routes to United which grew very fast in the segment and now occupies the first spot. 3Q Atlantic flying came in disappointing, but Domestic was very solid.
- DAL’s 1x leverage target is the lowest target in the industry.
- Higher income households are still outspending the middle and lower income ones, propelling Delta’s business even higher.
Key Metric
AS OF 14 Oct 2025| $ mn | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|
| Revenue | 50,582 | 58,048 | 61,642 | 62,920 |
| EBIT | 3,661 | 5,521 | 5,995 | 6,072 |
| EBITDAR | 6,276 | 8,394 | 9,056 | 9,076 |
| Cash | 3,266 | 2,741 | 3,069 | 3,791 |
| Short Term Investments | 8,412 | 10,061 | 721 | 0 |
| Net Debt | 16,634 | 16,269 | 13,151 | 11,088 |
| Adjusted Debt/LTM EBITDAR | 5.3x | 3.5x | 2.7x | 2.5x |
CreditSight View Comment
AS OF 17 Nov 2025Delta’s 3Q25 was yet another reminder of the power of its premium-driven business model. While competitors are pulling capacity, Delta is powering through, driven by strength in its premium segment. The Delta credit story remains intact, with $3bn of debt paydown on track for this year, on the way toward a 1.0x leverage target in the coming years. We retain our Outperform view on Delta and continue to expect ratings upgrades into the A category as the company executes on its capital structure target.
Recommendation Reviewed: November 17, 2025
Recommendation Changed: April 12, 2024
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Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 13 Aug 2025While Meta is executing strongly from a product perspective, we are concerned by its surging AI investments and regulatory risks. Meta acquired a 49% stake in Scale AI for $14 bn in 2Q25. The company expects capex to have “similarly significant” dollar growth in 2026; this implies it could be ~$100 bn or ~45% of sales in 2026.
There are also concerns on the regulatory front. We could potentially see a ruling in the next several months from the FTC suit which is seeking to unwind prior acquisitions of Instagram and WhatsApp. In addition, the EC’s DMA decision could require modifications that impact its European revenue. Gross leverage is 0.3x although net cash declined sharply to $18.2 bn in 2Q25. We also think Meta could be in the market fairly soon with a jumbo bond deal.
Business Description
AS OF 13 Aug 2025- Meta Platforms is the largest social networking company in the world. Meta's advertising revenue is primiarly from Facebook and Instagram, although also on Messenger, Whatsapp, Threads, and third-party affiliated websites and apps.
- In 2Q25, Family of Apps was 99% of revenue (98.0% from advertising and 1.2% from other) and Reality Labs was 1% of revenue. Reality Labs generated $18.1 bn in operating losses during LTM 2Q25.
- There are 3.48 bn Family Daily Active People (DAP) as of 2Q25, and the Family Average Revenue per Person (ARPP) was $13.65 quarterly in 2Q25.
- Meta is headquartered in Menlo Park, California. Employee headcount was >75.9k at 2Q25.
Risk & Catalysts
AS OF 13 Aug 2025In December 2020, the FTC filed a lawsuit against Meta seeking to unwind prior acquisitions of Instagram and Whatsapp.
Meta’s business model relies almost entirely on user-generated content, exposing it to customer privacy concerns and regulatory changes (e.g., Section 230 protections).
Surging capex for AI and continued investments in Reality Labs could weaken the balance sheet although Meta has reportedly raised $29 bn in external financing from PIMCO and Blue Owl for its Louisiana data center project.
We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments.
A potential ban of TikTok (extended through 9/17/2025) would positively impact Meta and others with short-form video products.
Key Metric
AS OF 13 Aug 2025| $ mn | 2021 | 2022 | 2023 | 2024 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue YoY % | 37.2% | (1.1%) | 15.7% | 21.9% | 19.4% |
| EBITDA | 63,882 | 49,622 | 71,955 | 101,568 | 112,933 |
| EBITDA Margin | 54.2% | 42.6% | 53.3% | 61.7% | 63.2% |
| CapEx % of Sales | 16.3% | 27.5% | 20.8% | 23.8% | 30.6% |
| Sh. Ret. % of CFO-CapEx | 116% | 152% | 46% | 68% | 78% |
| Net Debt | (47,998) | (30,815) | (47,018) | (48,989) | (18,239) |
| Gross Leverage | 0.0x | 0.2x | 0.3x | 0.3x | 0.3x |
| EV / EBITDA | 14.0x | 5.8x | 12.3x | 14.5x | 16.6x |
CreditSight View Comment
AS OF 18 Nov 2025Meta delivered strong revenue growth in its 3Q25 results and 4Q25 guidance, which were both above consensus expectations. However, total expenses are now expected to grow “significantly” faster in 2026 relative to the 22-24% YoY implied growth in 2025. Also, capex will have “notably larger” dollar growth in 2026. We estimate this could imply $115-120 capex or ~50% of sales in 2026. As a result, we think FCF could be slightly negative in 2026. Meta just launched $30 bn IG bonds which is on the heels of the recent $27 bn off balance sheet Meta JV bond deal. Pro forma for $30 bn issuance, gross leverage is 0.5x (0.2x at 3Q25) and lease-adjusted leverage is 0.7x (0.4x at 3Q25). Net cash was $15.6 bn at 3Q25. Meta recently prevailed in the FTC’s monopoly litigation.
Recommendation Reviewed: November 18, 2025
Recommendation Changed: July 31, 2025
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