(Reuters) – Fitch Ratings cut its forecasts for Boeing’s (NYSE:) 2024 aircraft deliveries and free cash flow on Friday as the planemaker grapples with investigations and falling production of its best-selling plane.
“Delivery forecasts were impacted by the decision by the Civil Aviation Administration of China (CAAC) to limit deliveries of certain aircraft models to Chinese customers while requesting additional documentation related to voice recorder and battery information,” Fitch said.
The outlook revision also reflects the FAA’s decision to maintain oversight of Boeing’s factories while pursuing individual certification of new aircraft.
Boeing currently has a BBB-minus rating, one notch above junk status, with a negative credit outlook from several agencies as its 737 MAX output fell into the single digits at times this spring. The US aircraft maker said earlier this month it would burn cash rather than generate it.
Fitch and other agencies do not currently expect these latest adjustments to result in a rating change.
Jonathan Root, a senior vice president at Moody’s Ratings, said Friday that Boeing’s recent comment about negative free cash flow was unexpected.
“This is another example of Boeing’s continued negative surprise as it rebuilds its commercial aircraft business,” Root told Reuters.
However, he said Boeing’s improved liquidity following its $10 billion debt issuance in May is now mitigating “potential pressure on the ratings.”
Nick Varon, a senior director at Fitch, told Reuters that the possibility of Boeing’s cash burn in 2024 was broadly included in the agency’s negative outlook.
Varone cited a return to 737 MAX production rates to about 38 per month or inventory drawdown as factors Fitch is looking for to return to a stable outlook.
The ratings agency forecasts 350 to 370 737 MAX deliveries and about 65 to 70,787 deliveries in 2024, down from previous expectations of about 400 and 75, respectively.