WASHINGTON (Reuters) - Boeing Co (BA.N) confirmed it is in talks with senior White House officials and congressional leaders about short-term assistance for itself and the entire aviation sector.
Boeing, already struggling to win approval from regulators for its 737 MAX to return to service after two fatal crashes in five months, is in talks with the U.S. government to try to win support for manufacturers, suppliers, airlines and airports, the person said.
This discussions come on a day the planemaker saw its stock plummet 24% to $129.61, and is off more than 60% over the last month as the coronavirus pandemic slashed travel demand worldwide. Earlier on Monday, S&P Global downgraded Boeing’s credit rating and lowered its free cash flow expectations for the company.
The Boeing talks for short-term government aid were reported earlier by Bloomberg News, and later confirmed by a source familiar with the situation to Reuters.
Boeing said late Monday that ready short-term access to public and private liquidity will be one of “the most important ways” for airlines, airports, suppliers and manufacturers to recover. “We appreciate how the administration and Congress are engaging with all elements of the aviation industry during this difficult time,” is added.
Boeing said it is “taking steps to manage the pressure on our business. We’re leveraging all our resources to sustain our operations.”
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 declined to say how much in assistance it was seeking or in what form it might take, but added the entire U.S. aerospace industry that “supports over 2.5 million jobs and 17,000 suppliers – is facing an urgent challenge resulting from the coronavirus pandemic.”
U.S. President Donald Trump, in a tweet late Monday, wrote “the United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected” by the coronavirus. A White House official confirmed the talks “to discuss their views generally just as we have with others.”
Boeing and airlines are making the case that they need quick assistance and hope that there will be action in days, the person familiar with the talks and airline officials said.
Reuters reported Wednesday that Boeing was planning to draw down the rest of a $13.8 billion loan it agreed 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.
Last week, Boeing said it was freezing new hiring and overtime except in certain critical areas to preserve cash, the U.S. planemaker’s chief executive.
Boeing Chief Executive Dave Calhoun told employees on Wednesday the company was taking steps to address the business pressures that result from “the pain our customers and suppliers are feeling.” A source familiar told Reuters last week that layoffs or furloughs were also a “real possibility.”
Airlines are slashing flights and it raises questions about whether they will cancel orders for the MAX, which has been grounded for just over a year.
Boeing idled production of the MAX in January and has said it hopes to win approval for return to service in mid-2020.
Reporting by David Shepardson; Editing by Sandra Maler and Edward Tobin