Fitch cuts Boeing's credit rating over 737 MAX return

Fitch cuts Boeing's credit rating on doubts over return of 737 MAX

The Fitch ratings logo is seen at their offices at Canary Wharf financial district in London, Britain. (REUTERS photo)

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 the business risk from fines, litigation, weakened competitive position or reputation damage," the rating agency said in a statement.

Fitch, however, maintained a "stable outlook" on the Chicago-based planemaker, thanks to better performance at its other businesses. 

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