S&P Global cuts Boeing outlook to 'negative' as virus hits aircraft demand

FILE PHOTO: Signage of The Boeing Company in Seattle, Washington, U.S. June 29, 2020. REUTERS/Karen Ducey/File Photo

(Reuters) - S&P Global Ratings on Wednesday cut its outlook on U.S. planemaker Boeing Co BA.N to "negative" from "stable", saying recovery in the aerospace industry could take longer than expected due to the impact of the coronavirus crisis.

“This could result in weaker cash flow over the next few years, making it difficult for Boeing to pay down debt and improve earnings before interest, taxes, depreciation, and amortization (EBITDA) and restore credit metrics,” S&P Global said.

The agency, however, reaffirmed Boeing’s credit ratings, including “BBB-” long-term and “A-3” short-term, citing “sufficient liquidity” with the planemaker.

Boeing should be able to cover large cash outflows over the next 6-12 months to manage the downturn and could generate positive free cash flow next year as it is expected to start deliveries of the grounded 737 MAX, S&P Global said.

The company does not see the need to add to liquidity through additional debt offerings to manage the downturn, Boeing Chief Financial Officer Greg Smith said at a virtual conference on Wednesday.

Boeing’s “priority one” was to pay down its debt and get its balance sheet back in order when the industry recovers, Smith added.

Reporting by Ankit Ajmera in Bengaluru; Editing by Vinay Dwivedi