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Fitch cuts outlook for Boeing on 737 MAX issues

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By Reuters
Fitch cuts outlook for Boeing on 737 MAX issues
The Boeing logo is pictured at the Latin American Business Aviation Conference & Exhibition fair (LABACE) at Congonhas Airport in Sao Paulo, Brazil August 14, 2018. REUTERS/Paulo Whitaker/Files   -   Copyright  Paulo Whitaker(Reuters)
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(Reuters) – Fitch Ratings lowered its outlook for Boeing Co <BA.N> to “negative” from “stable” on Monday, citing regulatory uncertainty around the timing of its 737 MAX jets’ return to service.

The rating agency said MAX will remain a concern for the aviation sector into 2020, and expects a lingering impact on Boeing’s operating margin for several years after the jet returns to service.

The downward revision was also based on the challenge of returning parked planes to service, delivering stored post-production aircraft and the financing needed to build up working capital, Fitch said.

It also flagged the risk of higher concessions to airlines, especially if the MAX grounding extends into the end-of-year holiday season.

“The MAX situation also presents significant public relations challenges, and the impact on Boeing’s reputation and brand will be a watch item for the next year or more,” the agency said.

Boeing ended 2018 with net debt for a second consecutive year, and Fitch said it expects this to continue in 2019.

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Shinjini Ganguli)

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