S&P revises Boeing outlook to negative

S&P said it revised its outlook for Boeing Co. to negative from stable and affirmed its BBB- issuer rating.

“Persistent quality shortcomings heighten the risk for a delayed recovery in Boeing's credit measures. Boeing is expected to implement significant changes to its manufacturing processes following an incident on Jan. 5, 2024, in which a door plug blew off a 737 MAX-9 fuselage, leading to increased oversight of its operations by the Federal Aviation Administration (FAA). Preliminary investigation findings indicate that quality deficiencies in Boeing's manufacturing processes contributed to the incident,” S&P said in a press release.

The agency said it now sees elevated risk concerning the company's ability to achieve S&P’s estimates, which include much higher levels of future production.

“Key reasons include the ongoing review of its manufacturing process (internally and by the FAA), the company's history of underperformance relative to guidance and our expectations, and our updated reduced forecasts. We assume a significant increase in 2025 deliveries and further improvement thereafter,” S&P said.

The agency said it now expects Boeing to deliver credit measures much weaker than the previous estimates, including funds from operations to debt of 16%-18% in 2025, just under the threshold for a stable rating outlook and about a year longer than what S&P had thought.

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