CHICAGO, July 16 (Reuters) - Fitch Ratings on Tuesday

upgraded Delta Air Lines' ( DAL ) credit rating to investment

grade, citing improvements in its balance sheet in the past

three years.

The Atlanta-based carrier's rating was cut to junk during

the pandemic when a slump in air travel brought the industry to

its knees. A junk credit rating makes it harder and more

expensive for companies to raise capital.

After the pandemic, Delta has been focusing on paying down

debt and getting back its investment-grade rating.

Fitch upgraded Delta to 'BBB-' from 'BB+' with a stable

outlook. The carrier also has an investment grade rating from

Moody's, but S&P rates it in junk territory.

Fitch said Delta's credit metrics have improved considerably

after the pandemic as it has reduced its gross debt and

operating leases by roughly $11 billion in the past three years.

It said travel demand will remain healthy through 2024,

helping Delta generate free cash flow. It expects the company to

reduce unencumbered assets to $30 billion by the end of the

year.

Delta forecast last Thursday a lower-than-expected

third-quarter profit as excess industry capacity has dampened

airfares at the low end of the market.

Fitch, however, said it expects Delta to remain among the

most profitable airlines, citing a pickup in corporate travel

bookings and sustained demand for premium travel.