TEXT - S&P says Boeing ratings unaffected after FAA grounds 787

Thu Jan 17, 2013 10:23am EST

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Jan 17 - Standard & Poor's Ratings Services said its ratings and outlook on
Boeing Co. (A/Stable/A-1) are not affected after the U.S. Federal
Aviation Administration (FAA) and aviation authorities in other countries
grounded Boeing's new 787. The FAA issued an emergency airworthiness directive
temporarily forbidding flights of the 787 by U.S. airlines (United Continental
is the only so far to take deliveries) until concerns about the fire risk if the
plane's lithium ion batteries overheat is addressed--an action similar agencies
in other countries where the aircraft is operated have also taken. Although new
aircraft often have minor problems when first introduced, rarely has this
resulted in the FAA grounding the fleet. It is not clear how long the aircraft
will be grounded, but Boeing is working on a solution. 

Although this is an unwelcome development, we do not believe this will result 
in a material impact to Boeing's credit quality in the near term, and the 
company has ample liquidity (more than $10 billion in cash and short-term 
investments, and $4.6 billion of revolver availability as of Sept. 30, 2012) 
to address the costs of fixing the problem. However, depending on how 
complicated the problem is to fix, this could limit the company's ability to 
increase production from five per month now to 10 per month by the end of the 
year, reducing our expectations of significant improvement in cash generation 
in 2013 and beyond. So far no airlines that have 787s on order have cancelled, 
but if the problem is not fixed quickly they could, and continued problems 
could cause new customers to not buy the aircraft.

Primary Credit Analyst: Christopher A Denicolo, CFA, New York (1) 212-438-1000;
                        christopher_denicolo@standardandpoors.com
Secondary Contact: Chris Mooney, CFA, New York (1) 212-438-1000;
                   chris_mooney@standardandpoors.com


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