S&P Puts Boeing Rating On CreditWatch Negative As Strike Extends By Reuters

(Reuters) – Global ratings agency S&P said on Tuesday it has placed Boeing’s (NYSE: ) rating on CreditWatch negative as about 33,000 of the U.S. planemaker’s workers remain on strike, halting production of its best-selling planes.

The union, whose members are now on strike for 26 days, is seeking a 40 percent pay rise over four years and the restoration of a defined benefit pension that was taken away by contract a decade ago.

The rating agency estimates that Boeing will incur a cash outflow of about $10 billion in 2024 and will likely require additional financing.

The S&P CreditWatch listing reflects the increased likelihood of a downgrade if the strike continues, raising costs and delaying the company’s recovery in aircraft production and cash flow generation.

Last month, all three major ratings agencies, including S&P, warned that a protracted strike at Boeing’s West Coast factories could lead to a downgrade, a blow for the planemaker that is saddled with massive debts.

The first labor strike at Boeing since 2008 coincides with a period of intense scrutiny of the company by US regulators and airline customers after a mid-air incident in January when a door panel detached from a airplane 737 MAX.

The company’s finances are already stretched by a $60 billion debt pile.

S&P said on Tuesday that it does not expect the company to meet its goal of increasing production of its best-selling 737 MAX to 38 planes per month by the end of the year.

The strike is expected to cost Boeing more than $1 billion a month, despite cost-saving measures the planemaker has implemented in response to the production shutdown.