Fitch Ratings Adjusts Boeing’s 2024 Delivery and Cash Flow Projections Amid Regulatory Challenges

Fitch Ratings has revised its forecasts for Boeing’s aircraft deliveries and free cash flow for 2024, citing regulatory scrutiny and production challenges. The adjustment reflects ongoing investigations and a production slowdown, particularly of Boeing’s top-selling 737 MAX jet.

The forecast changes are partly due to the Civil Aviation Administration of China (CAAC), which has imposed restrictions on certain Boeing model deliveries pending further documentation about the aircraft’s voice recorder and battery systems. Additionally, the U.S. Federal Aviation Administration (FAA) has intensified its oversight at Boeing’s manufacturing sites, requiring individual certification for newly produced aircraft.

Boeing, which holds a BBB-minus rating—just a notch above “junk” status—has faced significant hurdles this year, including periods when production of the 737 MAX dipped into single digits. Earlier this month, Boeing indicated a shift towards cash consumption rather than generation, signaling potential financial stress.

Despite these challenges, credit rating agencies, including Fitch, do not anticipate immediate changes to Boeing’s credit rating. Jonathan Root, senior vice president at Moody’s, expressed surprise at Boeing’s cash flow statement but noted that a recent $10 billion debt issuance has bolstered the company’s liquidity, providing some buffer against rating downgrades.

Nick Varone, senior director at Fitch, acknowledged that the forecast for Boeing to burn through cash in 2024 had been factored into their negative outlook. However, he highlighted positive signs such as an expected increase in 737 MAX production to about 38 units per month and efforts to reduce inventory levels as potential stabilizers for the company’s financial outlook.

For 2024, Fitch now expects Boeing to deliver between 350 and 370 units of the 737 MAX and about 65 to 70 units of the 787, marking a decrease from previous estimates of 400 and 75 deliveries, respectively. These revised projections underscore the significant impact of regulatory decisions and production challenges on Boeing’s operations and financial health.

Sources: AirGuide Business airguide.info, bing.com, reuters.com