Textron Inc. Ratings On Watch Negative On Expected Decline In Business Jet And Industrial Demand Due To The Coronavirus

  • The coronavirus pandemic will likely reduce the demand for Textron Inc.'s business jets, commercial helicopters, auto fuel tanks, and specialized vehicles.
  • Therefore, we are affirming all of our ratings on Textron, including our 'BBB/A-2' issuer credit rating, and are placing them on CreditWatch with negative implications.
  • We expect to resolve the CreditWatch when we receive additional information about the effect of the coronavirus on the company's earnings and cash flow.
NEW YORK (S&P Global Ratings) March 25, 2020—S&P Global Ratings today took the rating actions listed above.
The majority of Textron's business segments will likely see reduced demand because of the effects of the coronavirus pandemic on the global economy. Specifically, the company's business jets (39% of revenue), commercial Bell helicopters (10%), and industrial segment (27%), which comprises Kautex (fuel tanks for vehicles) and specialized vehicles, will all likely see weaker demand. While the effect of the pandemic on Textron's business jet and commercial helicopter segments will likely be less severe than during the financial crisis, we still expect the company to experience order deferrals and cancellations, which will reduce its revenue and earnings. We expect Textron's Kautex business to experience a significant decline in demand as auto manufacturers pull back on their production.


We will resolve the CreditWatch when we receive more information about the extent of the coronavirus' effects on the company's business jet, commercial helicopter, and industrial operations. We could lower our rating if order deferrals or cancelations for business jets and commercial helicopters, lower demand for automotive fuel tanks, or disruptions to the company's operations reduce its earnings and cash flow such that we no longer believe its funds from operations-to-debt ratio will increase above 40% in the next 12-24 months.
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