North American Airlines: Upgrading Our LUV and UAL Credit Ratings

Research evidence excerpt

North American Airlines: Upgrading Our LUV and UAL Credit Ratings

J P M O R G A N North America Credit Research

17 June 2026

North American Airlines

Upgrading Our LUV and UAL Credit Ratings

Credit Update: Upgrading LUV from UW to N, Upgrading UAL Unsecureds from North America Corporate Credit -

N to OW, Still Favor Long Risk AAL 5yr CDS, JBLU Loyalty Looks Interesting REITs, Transportation and

Below $90. Sustainable Investing

Mark Streeter, CFA AC

• LUV credit upgraded from Underweight to Neutral: To start, LUV’s return (1-212) 834-5086

to high-margin podium (whether 1st, 2nd or 3rd place, doesn’t really matter mark.streeter@jpmorgan.com

much to us) coupled with more clearly articulated conviction from J.P. Morgan Securities LLC

management in regards to maintaining solid IG ratings (where on the BBB

spectrum still open to debate) drives our credit upgrade from Underweight to

Neutral. Our pair trade to be long risk 5yr DAL CDS and short risk LUV CDS

has worked well, compressing from the LTM wides of 40bp (exactly one year

ago) to the current 9bp difference. We continue to favor DAL (Neutral) over

LUV as we see higher ratings upside at the former, with the potential for DAL

to achieve LUV’s prior single A high ground. For perspective, LUV was rated

mid or low A at S&P from 1984-2008 and low A at Moody’s during the 1996-

2001 and 2017-2020 periods. We expect to be debating the upside on DAL’s

ratings for years to come, while we think LUV’s landing spot in the BBB

spectrum will ultimately depend on how aggressive the revised management

team will be on the share repurchase front. What has changed is that any

thought of LUV management being so aggressive as to jeopardize current solid

BBB ratings (Baa2/BBB/BBB+, outlooks Stable/Negative/Negative) is