Textron Inc.

Our negative outlook on Textron Inc. reflects the potential that its credit metrics will weaken due to the coronavirus pandemic's effects on its business jet, commercial helicopter, automotive fuel systems, and specialty vehicle operations. It also reflects the possibility that the company will employ a more aggressive financial policy. We now expect Textron's FFO to debt to return to the 35%-40% range in 2021 and 2022. We could lower our rating on Textron if we anticipate its FFO to debt will remain below 35% in 2021 and do not expect it to improve. This would likely be due to continued weakness in the company's non-defense markets due to the coronavirus pandemic. Alternatively, this could occur if Textron is more aggressive

...We expect the demand for Textron's business jets and automotive parts to recover in 2021. We expect the volume of business jet deliveries to begin to recover in 2021 after declining due to the effects of the coronavirus pandemic. Business aviation travel has fared much better than commercial travel during the pandemic because those with the means to fly private continued to do so in 2020 to minimize their potential health risks. While we do not expect commercial air travel to recover to pre-pandemic levels until 2024, the volume of business aviation has essentially recovered to pre-pandemic levels, which will support the demand for new aircraft. We believe the recovery in the revenue from Textron's Aviation segment will be somewhat aided by the addition of new aircraft to its product line, given that Cessna expects its Skycourier to enter service during the second half of 2021, though it will likely take a couple years before its revenue recovers to 2019 levels. We also expect the demand...

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