(Reuters) - S&P Global Ratings lowered its outlook for Boeing Co (BA.N) to “negative” from “stable” on Tuesday, after reports that the planemaker may have misled the U.S. Federal Aviation Administration about problems with the anti-stall software on its grounded 737 MAX jet.
The ratings agency said the ongoing MAX grounding could further delay the aircraft’s return to service and have a lasting impact on the company’s reputation, profitability, and financial strength.
The grounding could weaken the planemaker's competitive position and make it difficult to maintain funds from operations (FFO) to debt above 40% after deliveries resume, according to the report. (bit.ly/2P5W7ed)
A significant further delay could require Boeing to cut or suspend production of the MAX, risking disruption to the supply chain, S&P Global said.
The rating cut comes a week after a Boeing senior pilot said he might have unintentionally misled regulators, in a series of internal messages from 2016 that became public on Friday.
“The most likely impact is that this could delay approval of the revised software by the FAA and other global regulators due to political pressures,” the ratings agency said.
Boeing and the FAA are grappling to contain a crisis in the wake of two deadly 737 MAX crashes that have left 346 people dead, forced airlines to ground more than 300 aircraft, and put on hold Boeing deliveries worth more than $500 billion.
Reporting by Ankit Ajmera and Sanjana Shivdas in Bengaluru; Editing by Shailesh Kuber