Moody’s Shares Projections for Production and Financial Recovery

After a painful seven weeks, the Boeing strike has come to an end. The mega manufacturer faced tremendous financial loss during this period and will need to take bold steps to recover.

Boeing was forced to put a “complete halt” to production of its popular 737 model during the strike, which began on September 13 and ended on November 5. It also temporarily paused work on its 767, 777/777X, P-8, KC-46A, and E-7 in Washington.

To gauge the true impact of the event, Moody’s Ratings published its post-strike projections for Boeing’s production and cash flow.

“Prior to the IAM 751 machinists’ strike, we believed that Boeing would achieve its 38 per month 737 production target in the fourth quarter of 2025, and we do not believe the strike itself will hinder that projection,” noted Jonathan Root, Senior Vice President for Moody’s Ratings. “However, a stronger supply chain will be integral to Boeing promptly achieving the 38 per month target and then expanding from there.”

Prior to the strike, Moody’s had granted Boeing the Baa3 rating. This is already the bottom line of the long-term investment-grade category and includes obligations subject to moderate credit risk. If the manufacturer were to dip below Baa3, it would automatically become a member of Moody’s speculative-grade section and find it much more difficult to borrow funds.

For reference, Moody’s confirmed a rating of A-2 for Airbus in May 2024. This places the competitor in the medium-high grade, low credit risk section.

To get back on track, Moody’s claims, Boeing will need to finalize certification of its 737 MAX 7, 737 MAX 10, and 777-9 airliners. It must also improve the quality and efficiency of its manufacturing, including in its own factories and with Spirit AeroSystems.

“Relieving the impediments to achieving and then sustaining strong positive free cash flow remains the challenge,” Root continued. “We don’t believe these objectives will be achieved before 2026, and we estimate that free cash flow will be around negative $5 billion in 2025 and will be only modestly positive in 2026.”

FMI: www.moodys.com