S&P Global Ratings downgraded United Airlines Holdings Inc. to B+ from BB-, saying that the company is likely to generate a significant cash flow deficit this year due to a steep decline in airline bookings as a result of the COVID-19 pandemic.

The action covers all ratings of United Airlines, including the issuer credit rating. S&P Global Ratings also removed the airline from CreditWatch and gave it a negative outlook.

The rating agency expects the U.S. flag carrier to record adjusted negative EBITDA of at least $2 billion in 2020 compared with positive EBITDA of $8 billion a year ago. The airline is projected to return to positive EBITDA of at least $4 billion in 2021.

United Airlines' efforts to cut capacity and associated costs and benefits are likely to be more than offset by much weaker traffic and revenues, the rating agency said. It noted that while passenger traffic has started to pick up, the slow and uneven recovery will likely continue into 2021.

S&P Global Ratings could lower United Airlines' rating over the next 12 months if it sees a prolonged or weaker-than-expected recovery, leading to continued cash flow burn.

The rating agency said revising the outlook to stable is unlikely in 2020, but it may do so if airline passenger traffic stages a stronger-than-projected rebound.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.