By Shivansh Tiwary
(Reuters) – Fitch and Moody’s (NYSE:) joined S&P Global Ratings on Friday in warning that a prolonged strike at Boeing’s (NYSE:) factories on the U.S. West Coast could lead to a rating downgrade, a headache for the aircraft manufacturer. saddled with enormous debts.
“If the current strike lasts a week or two, it is unlikely to put pressure on the rating. However, a prolonged strike could have a significant operational and financial impact, increasing the risk of a rating downgrade,” Fitch Ratings said.
Moody’s warned of a credit downgrade if Boeing were to issue debt in addition to the equity raised to meet its liquidity needs, including the money it needs to pay down about $12 billion in debt between now and the end of 2026 unload.
Moody’s currently rates the planemaker at “Baa3,” while Fitch has a “BBB-” rating – both a notch above junk status.
More than 30,000 workers left their jobs at Boeing on Friday after rejecting a contract deal that halted production of the 737 MAX plane, the company’s main cash cow.
CFO Brian West did not immediately answer when asked whether Boeing should raise debt or equity by the end of the year or early 2025.
“First, we want to prioritize investment-grade credit. And second, we want to get the plant and supply chain stabilized. That last goal has only become more difficult after last night,” he said at a conference hosted by Morgan Stanley.
“We feel completely comfortable replenishing our liquidity position to support these two objectives,” West said.
The first labor strike at Boeing since 2008 coincides with a period of intense scrutiny of the plane maker by U.S. regulators and airline customers following a January incident in which a door panel came loose from a 737 MAX plane in mid-air.
Boeing’s management will likely need to tap new sources of liquidity in the event of a prolonged strike to meet cash targets and stay within Fitch’s negative rating sensitivity, the rating agency said.
S&P Global Ratings had said on Thursday that a prolonged strike could delay the plane maker’s recovery and hurt its overall rating.
Boeing’s finances are already under pressure due to a $60 billion debt pile.
The plane maker’s shares fell 4% in afternoon trading, hitting an 18-month low.
(This story has been refiled to correct syntax in the headline)
