Boeing’s administration will seemingly have to entry new sources of liquidity within the occasion of a protracted strike.
Fitch Rankings and Moody’s have joined S&P World Rankings in warning {that a} extended strike at Boeing’s factories on america West Coast could result in a scores downgrade, a headache for the aircraft maker, which is saddled with large debt.
“If the present strike lasts per week or two, it’s unlikely to stress the score. Nevertheless, an prolonged strike may have a significant operational and monetary affect, rising the chance of a downgrade,” Fitch mentioned on Friday.
Moody’s warned of a downgrade if Boeing points debt alongside any fairness raised to satisfy its liquidity necessities, together with the cash it must retire about $12bn of debt maturities from now to the top of 2026.
Moody’s at the moment charges the plane maker at “Baa3” whereas Fitch has a “BBB-” score — each a notch above junk standing.
Greater than 30,000 staff walked off their jobs at Boeing on Friday after rejecting a proposed contract, halting manufacturing of its 737 MAX jet, the corporate’s essential money cow.
Chief Monetary Officer Brian West didn’t instantly reply when requested if Boeing might have to lift debt or fairness by 12 months’s finish or early 2025.
“To begin with, we wish to prioritise the funding grade credit standing. And secondly, we wish to permit the manufacturing unit and the availability chain to stabilise. That final goal simply received more durable based mostly on final night time,” he mentioned at a convention organised by Morgan Stanley, referring to the employees’ vote on Thursday to strike.
“We’re completely snug to complement our liquidity place to assist these two targets,” West mentioned.
The primary labour strike at Boeing since 2008 coincides with a interval of intense scrutiny of the aircraft maker by US regulators and airline clients after an incident in January when a door panel indifferent from a 737 MAX jet midair.
Boeing’s administration will seemingly have to entry new sources of liquidity within the occasion of a protracted strike to stick to its money targets and to stay inside Fitch’s adverse score sensitivity, the scores company mentioned.
S&P World Rankings had mentioned on Thursday that an prolonged strike may delay the aircraft maker’s restoration and harm its general score.
Boeing’s funds are already groaning attributable to a $60bn debt pile.
Shares of the aircraft maker had been down 4 p.c in Friday afternoon buying and selling, touching an 18-month low.
