Boeing calls for $60 billion lifeline for U.S. aerospace
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[March 18, 2020] By
WASHINGTON (Reuters) - Boeing Co on Tuesday
called for a $60 billion lifeline for the struggling U.S. aerospace
manufacturing industry, which faces huge losses from the coronavirus
Reuters first reported that Boeing was seeking "tens of billions of
dollars" in U.S. government loan guarantees and other assistance as
faces it a looming liquidity crunch due to the coronavirus' impact on
the aviation sector, two people briefed on the matter told Reuters.
Boeing spokesman Gordon Johndroe subsequently said the company "supports
a minimum of $60 billion in access to public and private liquidity,
including loan guarantees, for the aerospace manufacturing industry."
Boeing declined to say how much of that would be for the planemaker
versus loan guarantees for its suppliers; it was also unclear if U.S.
banks would loan any of the more than $60 billion without government
The U.S. planemaker has told lawmakers it needs significant government
support to meet liquidity needs and it cannot raise that in current
market conditions, the people said.
Boeing confirmed Monday it was in talks with the administration about
short-term support, while U.S. President Donald Trump said Tuesday the
U.S. government would provide support. Boeing has noted that typically
70% of its revenue flows to its 17,000 suppliers and has told lawmakers
that without significant assistance the entire U.S. aviation
manufacturing sector could collapse.
"This will be one of the most important ways for airlines, airports,
suppliers and manufacturers to bridge to recovery. 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," Johndroe said.
The amount of aid Boeing needs remains in flux based on market
conditions and how long the crisis lasts. Congressional officials are
reviewing Boeing's cash needs as Congress considers a stimulus and
rescue package that could top $1 trillion.
"Boeing got hit hard in many different ways," Trump said at a press
conference Tuesday. He said he would also help suppliers like engine
maker General Electric Co. "We have to protect Boeing... We'll be
[to top of second column]
A cleaning worker wearing protective suit sprays disinfectant inside
the cabin of a Lion Air's Boeing 737-800, amid the spread of
coronavirus disease (COVID-19), at Soekarno-Hatta International
Airport near Jakarta, Indonesia, March 17, 2020. REUTERS/Willy
Boeing's stock has been plummeting. After falling 24% on Monday, it fell
another 4.4% Tuesday to close at $123.92. Boeing is down more than 60%
over the last month as the coronavirus pandemic slashed travel demand
worldwide. S&P Global downgraded Boeing's credit rating on Monday and
lowered its free cash flow expectations for the company.
Boeing has been struggling to win approval from regulators for its 737
MAX to return to service after two fatal crashes in five months. The
plane has been grounded since March 2019.
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 confirmed on Tuesday that it had completed the drawdown of the
rest of a $13.8 billion line of credit it had secured 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.
Reuters on Tuesday reported Airbus has about 16 billion euros ($17.60
billion) in cash and needs some 5.5 billion euros a month, a person
familiar with Monday’s discussions said.
Industry sources said that even before the coronavirus crisis squeezed
its finances, Boeing had been providing financial support to a number of
suppliers to help them ride out the shutdown of 737 MAX production as
well as paying airlines compensation for the delay in delivering MAX
The focus on design problems as a key factor leading up to two fatal
crashes that led to the grounding has left the planemaker exposed to
potential shareholder lawsuits from partners and airlines at risk from
the MAX shutdown.
(Reporting by David Shepardson in Washington; Additional reporting by
Alexandra Alper in Washington and Tim Hepher in Paris; Editing by Lisa
Shumaker and Cynthia Osterman)
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