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S&P cuts Boeing to BBB, keeps ratings on negative watch

S&P Global Ratings downgraded Boeing Co.'s issuer credit and unsecured debt ratings to BBB from A-, saying the aircraft manufacturer's cash flow and credit ratios will be weaker than expected for the next two years.

The ratings, which remain on CreditWatch with negative implications, reflects the agency's new expectation that Boeing will post a cash outflow of $11 billion to $12 billion in 2020 and an inflow of $13 billion to $14 billion the year after, compared with respective inflows of $2 billion and $22 billion for those years as previously expected. The lower forecast is mainly due to the continued grounding of Boeing's troubled 737 MAX model as well as cuts to production of 787 jets and delays to the first deliveries of 777-9 planes.

The rating agency also warned that the impact of the coronavirus pandemic on global air travel could lead to significant deferrals in aircraft deliveries from 2020, further pressuring Boeing's cash flows. The pandemic could also complicate the return to service of the 737 MAX depending on how long air travel remains subdued, Ratings said.

S&P affirmed Boeing's short-term ratings at A-2 and placed them alongside the long-term ratings on CreditWatch with negative implications, indicating that a downgrade could come over the next 12 to 24 months if the agency views that Boeing's cash flow is even weaker than expected due to the 737 MAX grounding and coronavirus-related effects.

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