Boeing to Emerge as Big Stimulus Winner
March 27 2020 - 2:18PM
Dow Jones News
By Andrew Tangel and Doug Cameron
Boeing Co. is set to emerge as a big winner of the coronavirus
stimulus package, even if the aerospace giant declines to seek
direct taxpayer help.
The company had lobbied for at least $60 billion for itself and
its vast supplier network to blunt the blow of the pandemic that
has paralyzed global airline travel and reduced demand for
passenger aircraft.
The prospect of canceled orders and airlines unable to take new
planes added to the pressure on Boeing from the continuing crisis
around the grounding since last year of its 737 MAX jets, which has
already sent its debt soaring as it borrowed to compensate
customers and support suppliers.
The $2 trillion stimulus bill approved by Congress includes much
of what it wanted: billions of dollars available for it and its
supply chain, and billions more to its struggling airline customers
to stay in business.
"It's important that the supply chain gets relief," said Eric
Fanning, chief executive of the Aerospace Industries Association, a
trade group that counts Boeing among its members. "The most
effective way to inject support is through its customers."
Whether Boeing will tap into stimulus money directly remains to
be seen.
Lawmakers set aside $17 billion in loans and loan guarantees
directed at companies deemed essential to national security.
Congressional officials and a senior U.S. aviation industry
executive said the carve-out was partly aimed at Boeing.
Tapping that $17 billion pot would come with strings that Boeing
Chief Executive David Calhoun has rejected. In particular, the
loans would come with a condition that the U.S. government take an
equity stake or warrants for shares in loan recipients. The
government could instead take a senior debt position in
recipients.
"Right now, Boeing is saying they don't need it," U.S. Treasury
Secretary Steven Mnuchin said Friday on Fox Business Network. He
added: "I appreciate the fact that Boeing thinks they can operate
on their own -- that's what we want them to do."
Earlier this week, Mr. Calhoun told the television network
Boeing would rather secure private financing than give the
government an equity stake. "If they forced it, we'd just look at
all the other options, and we have got plenty," he said.
Mr. Calhoun said this week that Boeing had $15 billion in cash,
and it still has access to a $9.6 billion loan facility.
A Boeing spokesman said Friday the company was considering all
options for government aid, including a share of $454 billion of
stimulus funds available to businesses across industries that don't
require the government taking an equity stake.
Boeing shares, which had doubled this week, dropped 7% on
Friday. Shares in its suppliers and U.S. airlines also fell
sharply. The declines reverse gains earlier this week following the
Senate's passage of its stimulus plan.
Whatever help Boeing might wind up seeking, President Trump has
vowed to protect the Chicago-based manufacturer. It is widely
regarded as too important to the nation's economy and national
defense for the government to allow it to fail. Boeing is the
nation's largest exporter and second-largest defense contractor. It
supports thousands of smaller businesses that supply everything
from aircraft fuselages and wings to cockpit electronics.
The company has declined to detail the components of the $60
billion it has been seeking. After the Senate passed its stimulus
bill late Wednesday, Boeing praised the package, saying its
liquidity boost was "critical for airlines, airports, suppliers,
and manufacturers to bridge to recovery."
Faced with mounting financial strain, Boeing has suspended its
dividend and has been considering potential layoffs. Executives
have said they were working to avoid cutting or furloughing
employees from its 65,000-worker commercial arm.
Under the proposed stimulus plan, certain loan recipients must
maintain at least 90% of their current workforce through Sept. 30,
among other worker protections, eliciting praise from the
International Association of Machinists and Aerospace Workers,
which represents Boeing factory workers in the Seattle area.
--Lindsay Wise and Siobhan Hughes contributed to this
article.
Write to Andrew Tangel at Andrew.Tangel@wsj.com and Doug Cameron
at doug.cameron@wsj.com
(END) Dow Jones Newswires
March 27, 2020 14:03 ET (18:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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