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 pandemic.
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 backing.
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 helping Boeing.”
Boeing’s stock has been plummeting. After falling 24% on Monday, it fell another 4.4% Tuesday to close at $124.03. 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.
Trader Georgi Bozhidarov