CHICAGO--(BUSINESS WIRE)--Fitch Ratings expects to assign 'A+' ratings to Boeing Capital Corporation's (BCC) planned issuance of new senior unsecured notes (five- and 10-year maturities). Proceeds from the new notes will be used to fund debt maturities over the next year and for general corporate purposes. BCC is a subsidiary of The Boeing Company (BA). BCC's ratings are linked to BA's ratings due to the existence of a support agreement and other factors such as an operating agreement and transactional support provided to BCC by BA, but BA does not guarantee BCC's debt.

Fitch currently rates BA and BCC as follows:

--Issuer Default Rating (IDR) 'A+';

--Senior unsecured debt 'A+';

--Bank facilities 'A+';

--Short-term IDR 'F1';

--Commercial paper programs 'F1'.

The Rating Outlook is Negative. The ratings cover approximately $11 billion of debt ($3.4 billion at BCC and $7.6 billion at BA, including approximately $380 million of non-recourse debt).

A key rating driver for BCC's ratings is the continued support of BA. BCC's ability to balance support of BA's aircraft sales with efforts to mitigate industry cyclicality and aircraft and obligor concentration risks are also important rating factors. The Negative Outlook for BCC reflects the potential adverse effects of the recession and challenging credit market conditions on commercial aircraft demand, lease rates and aircraft values.

As the aircraft portfolio and corresponding debt has declined over the past five years, the company has maintained leverage at 5.0 times (x) via dividend payments to BA. Year to date, BCC has made dividend payments of $93 million to BA. In light of BCC's financing activities, Fitch continues to expect BA, if necessary, would provide capital support needed to continue to maintain leverage at that level.

As of Sept. 30, 2009, BCC's liquidity was approximately $1.6 billion consisting of complete availability under $1.5 billion of bank facilities and $80 million of cash. BCC has approximately $345 million of debt maturing in the remainder of 2009 and $645 million maturing in 2010. The company expects to provide a total of $800 million of aircraft financing in 2009, which includes approximately $550 million of new aircraft financing. However, BCC's overall aircraft portfolio should remain flat at about $6.4 billion for the year as origination volume will be offset by portfolio run-off. On Sept. 30, 2009 BA provided BCC with approximately $1.9 billion of transaction guarantees covering approximately $2.6 billion of BCC's portfolio. BA's liquidity position at the end of the third quarter, excluding BCC, was approximately $8 billion, consisting of $6.5 billion in cash and investments, and complete availability under $1.5 billion of bank facilities.

Recent delays in the 787 and 747-8 programs have negatively affected BA's credit quality. Cash flow pressures will persist through 2010 due to inventory build-up, delayed advance payments, and higher development expenditures. Fitch believes that break-even or negative free cash flow (cash from operations less capital expenditures and dividends) is a possibility in 2010 depending on the ultimate schedule for 787 deliveries and other factors such as pension contributions. BA has doubled parent company debt levels in the past six months, allowing BA to maintain a healthy liquidity position, but pressuring credit metrics. Fitch considers BA's credit metrics to be weak for the 'A+' rating, and the 787 developments have eroded the margin of safety at the current rating level.

Fitch revised BA's Outlook to Negative from Stable in April. The Outlook revision reflected Fitch's higher level of concern regarding several issues, including the global recession's impact on the commercial aerospace industry, increasing pressure on Department of Defense (DoD) budgets, the health of the aircraft finance market, the risk of further delays in the 787 program, and BA's buildup of inventories in 2008, which reduced the company's liquidity position by $8.5 billion. Other than the additional delays in the 787 program, most of the other concerns reflected in the Negative Outlook have moderated in the past six months.

Rating concerns for BA include the susceptibility of the commercial aerospace industry to shocks such as terrorism and disease; margin levels that are low for the rating category; periodic labor disruptions; and the performance of some programs at both Boeing Commercial Airplanes (BCA) and Integrated Defense Systems. The pension deficit and several litigation actions are also potential concerns.

BA's debt ratings are supported by the company's balanced business portfolio (approximately 50% defense and 50% commercial), financial flexibility, competitive positions in both of its main business lines, large backlog, high levels of defense spending, and solid credit metrics. BA's liquidity position and favorable debt maturity schedule also support the ratings. Fitch believes that BA has evolved into a more diverse and lower-risk company than it was at the beginning of the last aerospace downcycle that began in late 2001.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings
William Artz, 312-368-3178 (Boeing Capital), Chicago
Craig Fraser, 212-908-0310 (Boeing), New York
or
Media Relations:
Brian Bertsch, 212-908-0549, New York
Email: brian.bertsch@fitchratings.com