🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Boeing in talks for short-term U.S. government assistance

Published 03/16/2020, 09:26 PM
© Reuters. FILE PHOTO: The company logo for Boeing is displayed on a screen on the floor of the NYSE in New York
BA
-

By David Shepardson

WASHINGTON (Reuters) - Boeing Co (N:BA) confirmed it is in talks with senior White House officials and congressional leaders about short-term assistance for itself and the entire aviation sector.

Boeing, already struggling to win approval from regulators for its 737 MAX to return to service after two fatal crashes in five months, is in talks with the U.S. government to try to win support for manufacturers, suppliers, airlines and airports, the person said.

This discussions come on a day the planemaker saw its stock plummet 24% to $129.61, and is off more than 60% over the last month as the coronavirus pandemic slashed travel demand worldwide. Earlier on Monday, S&P Global (NYSE:SPGI) downgraded Boeing's credit rating and lowered its free cash flow expectations for the company.

The Boeing talks for short-term government aid were reported earlier by Bloomberg News, and later confirmed by a source familiar with the situation to Reuters.

Boeing said late Monday that ready short-term access to public and private liquidity will be one of "the most important ways" for airlines, airports, suppliers and manufacturers to recover. "We appreciate how the administration and Congress are engaging with all elements of the aviation industry during this difficult time," is added.

Boeing said it is "taking steps to manage the pressure on our business. We’re leveraging all our resources to sustain our operations."

U.S. airlines and cargo carriers have said they are seeking at least $58 billion in loans and grants along with additional tax changes, while airports have sought $10 billion.

Boeing declined to say how much in assistance it was seeking or in what form it might take, but added the entire U.S. aerospace industry that "supports over 2.5 million jobs and 17,000 suppliers – is facing an urgent challenge resulting from the coronavirus pandemic."

U.S. President Donald Trump, in a tweet late Monday, wrote "the United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected" by the coronavirus. A White House official confirmed the talks "to discuss their views generally just as we have with others."

Boeing and airlines are making the case that they need quick assistance and hope that there will be action in days, the person familiar with the talks and airline officials said.

Reuters reported Wednesday that Boeing was planning to draw down the rest of a $13.8 billion loan it agreed last month.

Boeing’s total debt nearly doubled to $27.3 billion in 2019, as it compensated airlines and grappled with additional production costs for the 737 MAX even as the grounding prevented it from delivering the aircraft to buyers.

Last week, Boeing said it was freezing new hiring and overtime except in certain critical areas to preserve cash, the U.S. planemaker’s chief executive.

Boeing Chief Executive Dave Calhoun told employees on Wednesday the company was taking steps to address the business pressures that result from “the pain our customers and suppliers are feeling" and added that layoffs or furloughs were also a “real possibility."

Airlines are slashing flights and it raises questions about whether they will cancel orders for the MAX, which has been grounded for just over a year.

© Reuters. FILE PHOTO: The company logo for Boeing is displayed on a screen on the floor of the NYSE in New York

Boeing idled production of the MAX in January and has said it hopes to win approval for return to service in mid-2020.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.