Boeing is at risk of losing its investment-grade credit rating due to a prolonged labour strike that has already caused a halt to production and affected the company’s cash flow. Moody’s Ratings is considering downgrading Boeing’s rating, which has been at Baa3, the last investment grade level, since April. This is stated in the material of Bloomberg, reports Komersant ukrainskyi
Moody’s said in a statement that it will assess the duration of the strike and its impact on the company’s financial performance, as well as the possibility of raising capital to strengthen Boeing’s liquidity. The company has more than $45 billion in net debt, and production problems that began after a near-catastrophic incident in January have led to significant financial difficulties.
If Boeing loses its investment grade rating and is downgraded to junk bonds, it will significantly increase its borrowing costs. The company has already suffered losses on several defence contracts and is also facing problems in the space industry due to delays and cost overruns. In addition, it will have to pay $4 billion in debt in 2025 and another $8 billion in 2026.
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Boeing CFO Brian West said during a Morgan Stanley conference that the company is assessing its ability to pay off its debts in the next 18 months. He also assured that Boeing is committed to maintaining its investment grade credit rating.
About 33,000 workers at Boeing’s main production sites in Seattle voted to strike, rejecting a new deal that offered a 25% pay rise and other bonuses. It is not yet known how long the strike will last, but both the company and the union are ready to return to negotiations.
Fitch Ratings and Standard & Poor’s have also said that Boeing is on the verge of losing its investment rating, which is currently at BBB-, the last one before junk.