Fitch revises Boeing's outlook to negative

Fitch Ratings has revised The Boeing Company's Rating Outlook to Negative from Stable. This action follows Boeing's comments around restoring its cash balance to $10 billion and staying ahead of maturities and liquidity needs over the next 12 months. The Outlook incorporates Fitch's expectation that Boeing could issue new debt to de-risk early-2025 cash flow risks and bolster financial flexibility as the company works through operational milestones.

Report informs citing the company that Fitch has affirmed Boeing's 'BBB-' Long-term Issuer Default Rating (IDR) and 'F3' Short-term IDR. Fitch has also affirmed the company's long-term unsecured notes and revolvers at 'BBB-' and CP program at 'F3'.

The Negative Outlook reflects Boeing's heightened execution risks over the next 12 to 24 months as it eliminates legacy inventory, stabilizes and increases aircraft production rates, navigates seasonal cash flow volatility, pursues additional corporate actions that should enhance longer-term operations and fulfills its commitment to repay debt and return to IG metrics.

Fitch could stabilize the Outlook if Boeing liquidates over 100 of its pre-2023 built 737 MAX and half of its 787 inventories by early 2025 and 737 MAX production increases toward 38 per month. Fitch believes these actions would alleviate operational strain and enable management to focus on the potential Spirit Aerosystems integration in 1H25. These improvements will also provide a path towards operational normalization and production optimization, facilitating FCF acceleration, debt repayment and return to an IG financial profile.

Boeing's 'BBB-' rating is supported by a $529 billion backlog (up about 30% during 2023), which provides several years of revenue visibility. The company is one of two major global aircraft manufacturers with substantial diversification to differentiate it from its largest competitor, particularly given its large defense and services businesses. Fitch projects the company will continue to generate positive annual FCF throughout its rating case with potential to approach double digit billions by the end of 2027 as operations normalize and operating margins improve.