Boeing rules out federal coronavirus aid after monster $25 billion debt sale
The Boeing logo is pictured at its Renton Factory, where the Boeing 737 MAX airliners are built in Renton, Washington on April 20, 2020.
JASON REDMOND | AFP via Getty Images
Boeing on Thursday said it wouldn’t seek federal aid to help it weather the coronavirus pandemic after the aerospace giant secured a whopping $25 billion in a bond offering, the company’s biggest debt sale ever.
The offering includes seven tranches with maturities that range from three to 40 years, the company said.
“As a result of the response, and pending the closure of this transaction expected Monday, May 4, we do not plan to seek additional funding through the capital markets or the U.S. government options at this time,” it said in a statement.
The $2.2 billion in federal coronavirus relief Congress approved last month set aside $17 billion in federal loans for companies considered of national security interest, a bill Boeing fits. Boeing’s CEO Dave Calhoun has balked at the possibility of providing the government an equity stake in return for federal aid, but this week said all options were on the table.
The company ended the quarter with $15.5 billion in cash.
Both Boeing and its main rival Airbus are facing their biggest crises ever as demand for new jets has evaporated in the pandemic. The dismal environment for new passenger planes and aircraft services is making Boeing more reliant on its defense arm.
Boeing has scrambled to shore up liquidity and recently drew down a nearly $14 billion loan. CEO Calhoun told investors on Wednesday that the company is “intensely focused on ensuring liquidity through the immediate crisis.”
Boeing is cutting 10% of workforce that stood at about 160,000 people at the end of last year and slashing production of planes including the 787 Dreamliner. Calhoun this week said it would likely take two to three years for travel demand to get back to 2019 levels.
The pandemic is a new crisis for the company that was already struggling from the fallout from two deadly crashes of its 737 Max that killed all 346 people on the flights. The plane has been grounded by regulators around the world since March 2019 and it isn’t clear when it’ll be cleared to fly again.