Moody's said the decision to halt production would raise costs for Boeing's best-selling plane and that the prolonged grounding would increase compensation claims from airline and leasing firm companies.
"The downgrades follow the extension of the grounding of the 737 Max into 2020, the announced plan to shut down this important program for some interim period and the uncertainty and elevated risk — both financial and operational — for Boeing and its broader supply chain over the ensuing period," said Jonathan Root, Moody's lead Boeing analyst in a release.
Moody's did raise its outlook on Boeing to stable, from negative, because of the company's "strong liquidity and financial flexibility" and strength in Boeing's other businesses, which include defense and services. "The stable outlook also reflects that Boeing's historically aggressive financial policy will remain tempered, with no share repurchases until after a sustained recovery following the ungrounding of the Max," Moody's said.
Boeing has $16.4 billion in outstanding debt as of the end of the last quarter, according to FactSet.
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