Boeing Debt Rating Lowered A Notch

Boeing Co.’s debt rating was reduced a notch by Standard & Poor’s to two notches below its top rating because the aircraft maker’s profit was lower than expected as it struggles with production line bottlenecks.

Standard & Poor’s pared Boeing’s and McDonnell Douglas’s corporate credit rating to “AA,” from “AA+” and changed its outlook on both to “negative.” Boeing, the world’s biggest aerospace company, bought McDonnell Douglas for $16.3 billion last year.

A lower credit rating makes it more expensive for companies to borrow money. Last month Boeing said the bottlenecks on its 737 assembly line will continue for the rest of the year and it may trim production of its 747 jumbo jet next year due to slackening demand from Asia.

“There is potential for additional charges to earnings on the 737 program as the production rate is scheduled to increase again late in 1998,” S&P said in a statement.

The $350 million charge in the first quarter for 737 problems “underscores continuing challenges,” the statement said.