Boeing administration will doubtless have to entry new sources of liquidity within the occasion of a protracted strike.
Fitch Rankings and Moody’s have joined S&P International Rankings in warning {that a} extended strike at Boeing’s factories on the US West Coast might result in a ranking downgrade, a headache for the debt-laden planemaker.
“If the present strike lasts one or two weeks, it’s unlikely to place strain on the ranking. Nonetheless, a protracted strike might have a major operational and monetary influence, which might improve the danger of a ranking downgrade,” Fitch mentioned on Friday.
Moody’s warned of a ranking downgrade if Boeing points debt together with any capital raised to satisfy its liquidity necessities, together with the cash it must settle about $12 billion in debt maturities between now and the top of 2026.
Moody’s at present charges the plane maker as “Baa3,” whereas Fitch has a ranking of “BBB-,” each one degree above junk standing.
Greater than 30,000 Boeing employees walked off the job Friday after rejecting a contract proposal, halting manufacturing of its 737 MAX plane, the corporate’s important income.
Chief Monetary Officer Brian West didn’t straight reply when requested whether or not Boeing would possibly want to lift debt or fairness later this 12 months or in early 2025.
“First, we wish to prioritize the funding grade credit standing. And second, we wish to enable the manufacturing unit and the provision chain to stabilize. That final aim has grow to be tougher after what occurred final night time,” he mentioned at a convention organized by Morgan Stanley, referring to the employees’ vote on Thursday in favor of the strike.
“We’re completely comfy complementing our liquidity place to assist each of those aims,” West mentioned.
The primary labor strike at Boeing since 2008 coincides with a interval of intense scrutiny of the planemaker by U.S. regulators and airline clients following an incident in January when a door panel broke off a 737 MAX jet in mid-air.
Boeing administration will doubtless have to entry new sources of liquidity within the occasion of a protracted strike to satisfy its money targets and stay inside Fitch’s unfavourable ranking sensitivity, the ranking company mentioned.
S&P International Rankings had mentioned on Thursday {that a} extended strike might delay the plane maker’s restoration and harm its general ranking.
Boeing’s funds are already affected by $60 billion in debt.
Shares of the plane maker fell 4 % in afternoon buying and selling on Friday, hitting an 18-month low.