Boeing Gets Credit-Rating Outlook Cut to Negative at S&P Amid Worries Over 737 Max

Press Release

Boeing (BA) had its credit rating outlook lowered at S&P Global Ratings on Tuesday amid worries that the 737 Max could face further delays in being brought into service after reports that the company may have misled regulators over problems with the aircraft.

In a note on Tuesday, S&P said it was cutting its outlook to negative from stable, while affirming the Chicago-based plane-making giant at A. Boeing’s stock retreated last week after reports that the company might have misled the Federal Aviation Administration about problems discovered with the maneuvering characteristics augmentation system, or MCAS software in 2016.

“The negative outlook reflects that potential lasting damage from the 737 Max grounding could weaken its competitive position and make it difficult to maintain funds from operations to debt above 40% after deliveries resume, absent a more conservative financial policy,” S&P said.

The reports about the FAA could bring more delays in returning the 737 Max to service, S&P said. The plane was involved in two fatal accidents, killing hundreds of passengers and crew, in 2018 and earlier this year. That led to regulators around the world to ground the plane.

In a statement Tuesday, Boeing said it’s made “significant progress” toward returning the 737 Max to service and is working with the FAA and other regulators around the world. It said has added three additional layers of protection to the MCAS software and has conducted more than 800 test and production flights with the updated versions.

On Sunday, Boeing said it regretted “the difficulties that the release of this document has presented for the US Federal Aviation Administration and other regulators,” in referencing the messages about the MCAS problems that were reported last week.

S&P said their “base-case expectation” is for Boeing’s credit measures to recover to levels that are more appropriate for its rating, even though they will likely stay below the downgrade trigger through most of 2020.

This post was originally published on Health Opinion

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