Fitch Ratings on Friday downgraded Boeing Co’s long-term credit ratings to ‘A-’ from ‘A’, citing regulatory risk regarding the timing of the 737 Max’s return to service.
The global ratings agency said the Max situation has reduced much of the planemaker’s financial cushion, leaving it more exposed to unforeseen events. The ‘A’ category represents high credit quality with expectations of low default risk.
Fitch expects Boeing’s debt to rise in the first and second quarters of 2020 and potentially peak at more than $32 billion to $34 billion. It expects the debt to nearly double to around $27 billion in 2019.
The downgrade comes shortly after Boeing said it was dealing with a new software problem discovered last weekend during a technical review of the proposed update to the grounded 737 Max, a development that could further delay the plane’s return to service.
“The Max situation, including recently-released internal emails, is...likely to increase business risk from fines, litigation, weakened competitive position or reputation damage,” the ratings agency said in a statement.
Fitch, however, maintained a “stable outlook” on the Chicago-based planemaker, thanks to better performance at its other businesses.