TEXT - S&P comments on Boeing
Jan 11 - Standard & Poor's Ratings Services said today that its ratings and outlook on Boeing Co. (A/Stable/A-1) are not affected by the Federal Aviation Administration's (FAA) announcement that it would begin a comprehensive review of the design, manufacture, and assembly of the new 787. The FAA has not grounded the 787 fleet and said it believes the aircraft is safe. Boeing started delivering the 787 to airlines in late 2011 and has delivered 50 so far. In recent months, there have been a number of incidents with 787s operated by various airlines, including a battery fire, fuel leak, and a cracked windshield. New aircraft are incredibly complex and often experience minor problems when first entering service. Boeing claims that the number and types of problems are consistent with other aircraft when they first entered service, such as the 777 in the mid-1990s. The 787 does, however, use electrical systems to a much greater extent than other aircraft currently in service and the FAA said this would be a focus of its review. The outcome of the FAA review could range from nothing to requiring Boeing to make minor changes to the design or manufacturing process to, although unlikely, a major redesign. Absent a major redesign, we do not believe at this time that the outcome of the review will have a significant impact on the financial profile or liquidity of Boeing. As of Sept. 30, 2012, the company had $11 billion of cash and short-term investments and $4.6 billion of available revolving credit facilities. However, resolving any problems with aircraft in service or in production could result in higher costs and cash use not only for Boeing, but also the suppliers of the affected components or systems. Also, the problems, if not quickly resolved, could result in airlines cancelling some of the approximately 800 787s on order or prompt them to buy competing aircraft.
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