Research Update: Boeing Co. Outlook Revised To Negative From Stable On Reports It May Have Misled FAA On 737 MAX; Ratings Affirmed

Recent reports that Boeing Co. may have misled the U.S. Federal Aviation Administration (FAA) about problems with the 737 MAX's flight controls could further delay the aircraft's return to service and have a lasting impact on the company's reputation, competitive position, profitability, and--ultimately--its financial strength. We are affirming our ratings on the aircraft manufacturer, including the 'A' issuer credit rating, and are revising our outlook to negative from stable. The negative outlook reflects that potential lasting damage from the 737 MAX grounding could weaken its competitive position and make it difficult to maintain funds from operations (FFO) to debt above 40% after deliveries resume, absent a more conservative financial policy. A transcript between two development pilots was released discussing problems

...- Recent reports that Boeing Co. may have misled the U.S. Federal Aviation Administration (FAA) about problems with the 737 MAX's flight controls could further delay the aircraft's return to service and have a lasting impact on the company's reputation, competitive position, profitability, and--ultimately--its financial strength. - We are affirming our ratings on the aircraft manufacturer, including the 'A' issuer credit rating, and are revising our outlook to negative from stable. - The negative outlook reflects that potential lasting damage from the 737 MAX grounding could weaken its competitive position and make it difficult to maintain funds from operations (FFO) to debt above 40% after deliveries resume, absent a more conservative financial policy....

Research Update