Moody's and S&P doubt Boeing will hit year-end production targets

Boeing will likely miss a key 737 MAX jet production target in 2024, analysts at rating agencies Moody's and S&P told Reuters, saying that the company faces challenges as it ramps up its strongest-selling plane.<br/>The U.S. aerospace giant's goal is to produce 38 MAX jets a month by the end of 2024, up from 25 jets a month in July. But Moody's and S&P said that goal may not be reached until 2025 due to risks like possible labor disruptions at the planemaker's facilities in the Seattle area. Boeing, however, faces no immediate risk of a credit downgrade that would drop its rating to junk levels, the two rating agencies said on Friday. Jonathan Root, lead Boeing analyst at Moody's, assumes the planemaker will end 2024 producing 32 MAX jets per month, and reach the target of 38 in the second half of 2025. "We remain in a 'show me' state of mind," he said. MAX production and deliveries, which are closely watched by investors and airlines, mostly slowed following a Jan. 5 mid-air panel blowout on a new 737 MAX 9that exposed longstanding quality-control problems at the jetmaker. Boeing slowed output so it could improve production quality, but the decline in output and deliveries has taken a toll on cash flow. It burned about $8.3b in cash in the first half of 2024 and expects free cash flow to be negative this year, burdening its balance sheet. "We see risks to reaching that number (38), including labor negotiations and the company’s history of underdelivering relative to targets," said Ben Tsocanos, aerospace director at S&P Global Ratings. "We view increasing and stabilizing MAX production as necessary to generating free cash flow, which is ultimately what we care about to maintain the rating."<br/>