Fitch cuts outlook for Boeing on 737 MAX issues

FILE PHOTO: Grounded Boeing 737 MAX aircraft are seen parked in an aerial photo at Boeing Field in Seattle, Washington, U.S. July 1, 2019. Picture taken July 1, 2019. REUTERS/Lindsey Wasson/File Photo

(Reuters) – Fitch Ratings lowered its outlook for Boeing Co (BA.N) to “negative” from “stable” on Monday, citing regulatory uncertainty around the timing of its 737 MAX jets’ return to service.

The rating agency said here MAX will remain a concern for the aviation sector into 2020, and expects a lingering impact on Boeing’s operating margin for several years after the jet returns to service.

The downward revision was also based on the challenge of returning parked planes to service, delivering stored post-production aircraft and the financing needed to build up working capital, Fitch said.

It also flagged the risk of higher concessions to airlines, especially if the MAX grounding extends into the end-of-year holiday season.

“The MAX situation also presents significant public relations challenges, and the impact on Boeing’s reputation and brand will be a watch item for the next year or more,” the agency said.

Boeing ended 2018 with net debt for a second consecutive year, and Fitch said it expects this to continue in 2019.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Shinjini Ganguli

Leave a Reply

Your email address will not be published.