Boeing reported US$26.3 billion of cash and investments at the end of 2024, which incorporated a $14.1 billion cash use for the year, and $24.3 billion issuance of equity and equity-linked securities in late October. The company subsequently repaid $3.5 billion of debt originally maturing in 2025.
The largest component of the announced charges – $0.9 billion – relates to higher expected costs for its new widebody 777X airplane, caused by incremental labour costs following the resolution of the strike. The charge follows a $2.6 billion charge taken in the third quarter of 2024 pertaining to delays related to the development of the aircraft.
Boeing’s defence business also recorded charges on its KC-46A tanker plane and T-7A, as well as smaller charges on its other troubled fixed-cost development contracts. These programmes have been a source of ongoing losses, and their extended difficulties will delay the company’s return to profitability. The charges are non-cash initially, but reflect a reduction of cash flows in future years. We expect the majority of the cash effect to be spread out in the years after 2025.
The company indicated that 737 MAX production has recovered to the low- to mid-20s per month after restarting in December, post-strike. The strike, which lasted 53 days and ended on 4th November, occurred as Boeing was working to overhaul its production process to address persistent quality inconsistencies. The company plans to ramp up its MAX build rate, targeting 38 per month as the year progresses, and seeking FAA approval for 42 per month by year end.
We view MAX production recovery as key to returning the company to positive free-cash-flow generation. We anticipate that Boeing will report a cash outflow in the first half of 2025 before generating cash in the second half.
Our ‘BBB-‘ long-term issuer credit rating and CreditWatch placement with negative implications are not affected by the announcements. We intend to resolve the CreditWatch placement when we are better able to assess the pace and stability of the recovery in MAX production as the first half of the year progresses.
We could lower the rating if Boeing experiences operational challenges that delay aircraft production or deliveries, or if it faces additional costs or delays to new aircraft deliveries. We believe that cash outflows will continue in the second half of this year, such that we no longer expect the company’s credit measures to reach levels consistent with the rating in 2026.
