Boeing gets another boost as credit agency says it won't cut its rating to junk status

• S&P Global Ratings says it's no longer considering downgrading Boeing to junk status.
• The firm raised billions in equity after losing lots of money in a challenging 2024.
• It's also set to ramp up production of the 737 Max, an important source of profit.

Boeing has another reason to believe that its turnaround year is on track.

S&P Global Ratings said on Monday that it was no longer considering downgrading the planemaker to junk status.

The credit rating agency grades companies based on how likely they are to repay debt, and a lower rating makes it more expensive to borrow money. S&P had put Boeing at risk of a downgrade in October.

Boeing reported a cash balance of $23.7 billion at the end of the first quarter — a positive sign after hemorrhaging money throughout a testing 2024.

Last year, the company faced a quality crisis after a door plug came off an Alaska Airlines 737 Max that had been delivered to the carrier just 66 days earlier. The Federal Aviation Administration subsequently restricted its production of the aircraft type to 38 a month.

A seven-week strike also temporarily shut down production of the Max, a significant cash cow for Boeing.

Boeing assuaged its troubles last October by raising $24.3 billion of equity.

S&P also cited the planemaker's deal to sell portions of its aviation-software business to private equity firm Thoma Bravo, which is expected to raise $10 billion.

However, cash flow remains a concern, with S&P affirming Boeing's BBB- rating.

But it looks like the company is set to start making money as it ramps up and stabilizes production of the Max.

"The key to cash generation will be continued progress on the 737 Max ramp," Boeing CEO Kelly Ortberg said in an earnings call last Wednesday.

He added that it is currently producing a number in the low 30s, but expects to reach the cap of 38 over the next few months. By the end of the year, Boeing plans to ask the FAA to increase this to 42.

S&P expects Boeing's negative cash flow to continue throughout the second quarter, but sees this turning around with more Max deliveries in the second half of the year.

"We view Max production recovery as key to returning the company to profitability and positive free cash flow generation," the ratings agency said.

Boeing reported first-quarter revenues of $19.5 billion, up 18% from the year before. However, it had a loss per share of 16 cents, and free cash flow was negative $2.3 billion.