We’re getting to the point where all the companies related to the travel industry want bailouts — we know that US airlines want $60 billionish and US hotels want $250 billionish, but they’re not alone… Boeing wants a bailout as well.
Boeing wants $60 billion in government aid
In a statement, Boeing has confirmed that they’re looking for a minimum of $60 billion in government aid for the US aerospace manufacturing industry (that’s about ~$182 per American):
We appreciate the support of the President and the Administration for the 2.5 million jobs and 17,000 suppliers that Boeing relies on to remain the number one US exporter, and we look forward to working with the Administration and Congress as they consider legislation and the appropriate policies.
Boeing supports a minimum of $60 billion in access to public and private liquidity, including loan guarantees, for the aerospace manufacturing industry. 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. 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.
We’re leveraging all our resources to sustain our operations and supply chain. We continue to assess additional levers as we navigate the current challenges and position the industry for the long term. As reported last week, drawing on our delayed draw loan term was a prudent step to increase our liquidity and ease some of the significant near-term pressures on our business. We filed an 8-K today to formally disclose that draw down.
Looking at Boeing’s report card
Boeing’s ask — all while not even acknowledging the mess that they’ve largely gotten themselves into — is on a whole different level. It’s not any individual thing, but when you add it all up and look at the big picture:
- Boeing has spent $45 billion on stock buybacks since 2009, all while increasing debt
- The company designed a faulty aircraft that has really caused the bulk of problems that the company has right now
- As Boeing’s current CEO says about the situation that the previous CEO got the company into — “I’ll never be able to judge what motivated Dennis, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase. If anybody ran over the rainbow for the pot of gold on stock, it would have been him.”
- While all of this is going on, the company has created big executive bonuses around getting the 737 MAX back in the sky, and the new CEO admitted he wasn’t willing to give up his salary, because he probably wouldn’t have taken the job
- On top of that, Airbus and Boeing have been at war for over 15 years over government subsidies for aircraft manufacturers
Bottom line
Ultimately Boeing will get a bailout, because Boeing is super important to the US economy — they employ a lot of people, they’re a huge exporter, and they’re a key player in aerospace.
I just hope that there are some strings associated with this, especially in regards to executive compensation, stock buybacks, debt ratios, and more.
As you might expect, Boeing’s stock is doing… not great.
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