Boeing Calls For Support For Aerospace Manufacturers

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Boeing is calling for the U.S. government to provide a minimum of $60 billion in “access to public and private liquidity, including loan guarantees” to help the aerospace manufacturing industry weather the economic impacts of the coronavirus (COVID-19) pandemic. Boeing’s production facilities remain open with “enhanced cleaning procedures” in place. The company also said it has drawn on its delayed draw term loan to “increase [its] liquidity and ease some of the significant near-term pressures” on its business.

“Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain,” Boeing said in a statement. “The long term outlook for the industry is still strong, but until global passenger traffic resumes to normal levels, these measures are needed to manage the pressure on the aviation sector and the economy as a whole.”

As previously reported by AVweb, trade association Airlines For America called for a similar $50 billion financial support package for the airline industry on Monday. AOPA, EAA, HAI, NATA, GAMA and NBAA sent a joint letter to Congress on Tuesday asking that air charter and fractional operators be included in any potential airline relief packages.

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16 COMMENTS

  1. Boeing is reaching the end of a very long string of bad luck – mostly self-inflicted. They have a point about maintaining cash flow to their suppliers.

    Of course, they could turn to the private sector for bridge loans, or have an emergency short term bond issue at, say, 20% interest. Either of these would cause extreme pain during the recovery and would likely result in ousting the board of directors – hence the request for a $60B liquidity injection from the government.

  2. Not bad luck – bad management.

    After Blowing $4.5 Trillion on Share Buybacks, Airlines, Boeing, Many Other Culprits Want Taxpayer & Fed Bailouts of their Shareholders

    by Wolf Richter • Mar 17, 2020 • 

    Chapter 11 bankruptcy that wipes out shareholders is the correct solution for collapsing share-buyback queens. US airlines already know this from experience. It works.

    By Wolf Richter for WOLF STREET:

    The Trump administration is putting together a rumored $850-billion stimulus package that will include taxpayer funded bailouts of Corporate America, according to leaks cited widely by the media. Trump in the press conference today singled out $50 billion in bailout funds for US airlines alone. A bailout of this type is designed to bail out shareholders and unsecured creditors. That’s all it is. The alternative would be a US chapter 11 bankruptcy procedure which would allow the company to operate, while it is being handed to the creditors, with shareholders getting wiped out.

    wolfstreet.com/2020/03/17/after-blowing-4-5-trillion-on-share-buybacks-corporate-america-airlines-boeing-other-culprits-want-taxpayer-fed-bailouts-for-these-shareholders

  3. For an interesting comparison, read the other article about how Quantas is dealing with the situation. Deferring the shareholder dividend, no pay for upper executives and the board members, and no bonuses for same. Plus, they are working with other companies to see if there are ways to employ their furloughed employees. Interesting contrast.

    I’m not necessarily supporting the bailout, but before you adopt the “screw the shareholders” chant, you might want to check your 401K, IRA or mutual fund portfolios. You might just be one of those shareholders. Just sayn’….. It’s a complicated world.

      • Because, Mark, in most cases the taxpayer is also the stockholder. As I said, I’m not lobbying for the bailout, I’m just saying that we don’t all need to piously pound the drum for letting the bastards fail when it will impact us too. It is complicated, because most 401Ks and mutual funds make investments without your input, with the goal of making you money. Can you tell me that you would sell a mutual fund because it owned Boeing or United as a portion of its portfolio? Bankruptcy is a pebble in a pond that ripples far beyond the company that goes under. It extends into suppliers and vendors that may also die in the process even though they were not complicit in Boeing’s mismanagement. Bailouts are a poor way of addressing the problem, but at this point they may be the only tool the government has to stop the bleeding.

  4. Cord, Auburn, Studebaker and AMC went bust. The world kept turning. Let Boeing go bust and let a new Company arise from the rubble Boeing itself created. The loss of McDonald-Douglas as a competitor to Boeing hurt the aviation community. The loss of Boeing will be just a ripple in the ocean of time and progress. Government has no business bailing out Boeing or any other mega-company. Let the chips fall where they may.

    • F-15s, etc. The government is not going to let Boeing go out of business.
      If circumstances become extreme ( ! ), Boeing may get broken up into several more-narrowly-focused companies. Airbus, too. Kind of like telling GM that they can make passenger cars, but not dump trucks.
      But, really – what would that accomplish? Be careful what you ask for…

  5. There should be some middle ground. Give Boeing the $60B it is looking for in exchange for a 50% equity stake in the company. In three years the taxpayers could exit the position for double their investment. It would be at least a 50% haircut for investors that bought in at the frothy top, but would also maintain a reasonable amount of value for the long term shareholders that may have bought in years ago.

    Otherwise, I am sure China would love to buy Boeing out of bankruptcy for ten cents on the dollar. I mean if you are REALLY going to let the chips fall where they may. Or do you draw the line somewhere in regard to no government intervention in the free market?