Moody’s is not convinced that Boeing will be able to deliver enough 737s to increase cashflow. Photo: Andreas Zeitler / Shutterstock.com.

Credit rating agency Moody’s is considering downgrading Boeing’s “Baa2” senior unsecured rating and its “Prime-2” short-term rating.

The agency said it believes that “Boeing will be unable to deliver 737 narrow-body aircraft at the volumes required for it to materially expand its free cash flow and retire debt in a reasonable timeframe,” suggesting that it will be able to deliver only 379 737 aircraft and 95 787s over 2024.

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It expected only $1bn of free cash flow in 2024 and a fall in held cash and short-term investments to under $10bn by the end of the month.

The news continued a turbulent week for the company following its CEO’s departure announcement on Monday (25 March). Boeing has been wracked by scandal in recent months after a series of high-profile incidents led to an investigation by the US Federal Aviation Administration (FAA) that found its safety culture “inadequate and confusing”.

Moody’s is one of the ‘Big Three’ credit rating agencies alongside S&P and Fitch, together providing a picture for investors as to the health of a company. It is used by creditors to decide the interest rates of any loans firms may take out. Boeing’s current ratings suggest moderate long-term credit risk and a strong ability to repay short-term obligations.

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S&P rated Boeing’s short-term loans as A-3 and long-term as BBB-, which are similar to Moody’s and rank them as ‘investment grade’. Its ratings have remained stable since April 2020. Fitch similarly ranks Boeing’s credit near the bottom of its investment grade ratings and reduced its outlook to stable from positive in a 15 March review despite earmarking the company for a rise last October.

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A Boeing spokesperson referred Airport Technology to its CFO’s comments at the Bank of America forum last week, where he said: “With regards to capital allocation in our framework, no change. We want to generate cash after having invested in our own growth and then de-lever the balance sheet. And as I’ve said, the investment grade rating is still a priority. […] The path to stable financials is a stable factory and that’s what we’re focused on right now.”