New York: Boeing Co. got downgraded by Moody’s Investors Service as the grounding of the 737 Max plane extends into next year, jeopardising the company’s financial future.
Moody’s cut Boeing one level to A3, four levels above speculative grade, noting the uncertainty around when the company’s best-selling aircraft will return to service, analyst Jonathan Root said in a report Wednesday. The suspension will increase Boeing’s program costs as well as airlines’ and lessors’ claims for compensation, not to mention a potentially more lasting reputational risk, Root said.
Boeing plans to halt production next month of the 737 Max, which has been grounded since March following two deadly crashes that killed 346 people. Almost 400 newly built jets are languishing in storage, and the timing of regulatory approval for the Max’s return remains uncertain.
The Chicago-based plane maker said the indefinite shutdown of its 737 factory in the Seattle area was the least disruptive option for the health of its production system and supply chain. But the decision adds to the uncertainty around the future of Boeing’s plane.
A further downgrade could occur if the grounding runs into the second half of 2020, Moody’s said.
Boeing’s bonds and shares were unchanged in late trading. The company has about $26 billion of debt outstanding.
