Moody's Places Boeing's Credit Ratings Under Review for Possible Downgrade
Moody's Investors Service said it is reviewing all of Boeing's ratings for a possible downgrade. The credit rating agency cited ongoing financial pressures and safety issues at the plane maker.
Moody's Investors Service put all of Boeing's ratings on review for a downgrade on Monday.
The move affects the company's long-term issuer rating, currently Baa2, as well as ratings on its senior unsecured bonds and other debt. Moody's said it expects to complete the review within three months.
The rating agency pointed to Boeing's weak cash flow and rising debt levels. It also cited continued safety and quality problems at the company's commercial airplane division.
Boeing has faced months of scrutiny after a door plug blew off an Alaska Airlines 737 Max 9 jet in January. The incident led to the grounding of some planes, tighter federal oversight and a drop in new orders.
Last week Boeing agreed to plead guilty to a criminal fraud charge tied to two deadly 737 Max crashes in 2018 and 2019. The deal still needs court approval.
The company reported a $1.44 billion loss in the first three months of this year. Its free cash flow turned negative as it burned through money to fix production problems.
Boeing's total debt stands at about $58 billion. The company has said it plans to borrow more this year to cover the shortfall.
Moody's said Boeing must show it can improve quality control, win back trust from airlines and return to positive cash flow. If it fails to do so, the company could face a one- or two-notch downgrade.
A downgrade could raise Boeing's borrowing costs at a time when it needs cash to rebuild its airplane output. The company has already cut its 2024 delivery forecast.
Boeing said in a statement that it is working closely with Moody's. The company added that it remains focused on fixing its operations and delivering for customers.
Standard & Poor's and Fitch also rate Boeing's debt. Both agencies have the company on negative watch.
Go Deeper
What does it mean when Moody's puts ratings on review?
It signals the agency is taking a close look at the company's finances and operations. A review for downgrade means Boeing could lose its current investment-grade rating within the next few months.
How much debt does Boeing carry right now?
The company has roughly $58 billion in total debt. That figure has grown as Boeing posted big losses and negative cash flow in recent quarters.
What triggered this review from Moody's?
The main reasons are weak cash generation, high debt, and ongoing safety and quality problems. The Alaska Airlines incident and the recent guilty plea on fraud charges added pressure.
Could this affect Boeing's ability to borrow money?
Yes. A lower credit rating usually means higher interest rates on new loans or bonds. That would make it more expensive for Boeing to raise the cash it says it needs this year.
What does Boeing need to do to avoid a downgrade?
Moody's wants to see steady progress on quality control, stronger cash flow and restored confidence from customers and regulators. The company must prove it can fix its production issues and return to profit.
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