I doubt US will let that happen BA is a systematically important company and Airbus ( EADSY) is trading at $13.27 at the moment, but what the hell do I know....
Boeing Stock Is Sinking Further as Investors Start to Worry About Its Survival By Daren Fonda March 18, 2020 11:39 am ET Boeing said it was seeking $60 billion in aid for the aerospace industry. Photograph by Scott Barbour/Getty Images Investors are starting to worry that Boeing’s very survival may be at stake as the coronavirus pandemic continues decimate the aviation industry. Boeing (ticker: BA) shares were sharply lower Wednesday morning after the company said it was seeking $60 billion in aid for the aerospace industry. Boeing has fully drawn on a $13.8 billion credit line and said it continues to have access to revolving credit lines arranged in October 2019, saying these credit lines have “not been drawn upon,” according to a filing last week. Boeing stock, a Dow Jones Industrial Average component, is down 68% this year, falling 17% late Wednesday morning to $102.99. The S&P 500 was down 6%. “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 company said in a statement. “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,” Boeing said. The coronavirus pandemic has caused waves of cancellations for plane orders as airlines ground their fleets and stop taking orders for new planes and parts. The pain is being felt throughout the aerospace industry, impacting Boeing and its suppliers, including General Electric (GE), Honeywell International (HON), Spirit Aero Systems (SPR), and United Technologies (UTX). Analysts are now concerned that Boeing and its suppliers face a cash crunch. “Boeing enters this aerospace downcycle already wounded by the MAX, and the question has started to be raised as to whether it can survive,” wrote analyst Robert Stallard of Vertical Research Partners. “Boeing was already on the ropes thanks to the grounding of the 737 MAX and now it is staring down the barrel of the biggest crisis yet to be experienced by the global aviation industry.” Will Boeing run out of money? Not necessarily. The company said it can still tap credit lines to continue production. And if the situation continues to deteriorate, Boeing would likely be among the first major companies in line to receive a financial-aid package from the federal government because it would be deemed “too big to fail.” But while a bailout may keep Boeing’s production lines running, it wouldn’t necessarily help equity investors. The bailout terms could leave Boeing “so encumbered with the debt that it is unable to compete effectively,” Stallard wrote. And the company hasn’t exactly built up goodwill with the public or Congress. Indeed, as Stallard noted, Boeing says on its website that it has bought back $35 billion of shares and paid $15 billion in dividends over the past five years. “It has also paid executives egregious amounts of money and been implicated in two fatal air crashes,” he wrote. “Getting a Boeing Bail Out through the US Congress could be tricky, with terms potentially akin to TARP,” he added, referring to the aid package for banks and other firms impacted by the global financial crisis. Boeing’s balance sheet and liquidity are now in the crosshairs as investors worry about the company’s growing debt and deteriorating credit outlook. S&P Global cut Boeing’s credit rating to BBB and kept its rating on a “negative watch” on Monday. S&P expects Boeing to post a cash outflow of $11 billion to $12 billion in 2020. Ratings firm Fitch also put Boeing on a negative credit-rating watch last week. Boeing’s debt nearly doubled in 2019 to $27.3 billion, and is on track to peak at more than $40 billion this year, Fitch noted. “Boeing has a challenging agenda,” Fitch said, including a deal to buy the commercial aviation business of Embraer SA (ERJ), development of the 777X plane, and other new products. “Coronavirus adds another challenge,” Fitch said. One near-term casualty of Boeing’s rapidly declining business may be its dividend. The company hasn’t announced a cut and the stock yields 6.6% at a payout rate of $8.22 per share. Boeing shelled out $4.6 billion in dividends last year, but that is likely unsustainable now. Analysts sound frustrated that a cut hasn’t been announced. “Given the quickly eroding trends for global airlines along with the idiosyncratic pressures of the 737 MAX return to service, we struggle with why a suspension of BA’s dividend doesn’t occur now,” UBS analyst Myles Walton wrote in a note on Monday. Walton said he thinks a move to a symbolic penny a share “makes the most sense and that a dividend reduction to some other level could imply that BA has a firmer footing on the slope of the challenge ahead than it probably does.” Boeing could certainly use an extra $5 billion this year, Walton noted, writing that it could fund three months of production of the 787 planes and 25 months of 737 production, assuming a return to previous levels in the second half of the year. Boeing suppliers are also reeling. The MAX plane represents about 30% of total Boeing sales, and it is critical for many suppliers. Spirit, for instance, derives nearly 80% of its revenue from Boeing. It makes the MAX fuselage, wing components and other parts. Boeing needs to inject cash into suppliers to keep them solvent, especially its smaller suppliers facing more strain as production slows. “The cash Boeing needs to inject is greater than they envisioned before,” said Kenneth Herbert of Cannacord Genuity. Write to Daren Fonda at daren.fonda@barrons.com https://www.barrons.com/articles/bo...-737-max-cash-crunch-51584545814?mod=hp_DAY_2
Boeing Stock Jumps As 737 Max Production Nears Restart Boeing (BA) reportedly plans to restart production of its grounded 737 Max in May, while its debt rating heads closer to junk status. Boeing stock climbed. I wonder as soon as can be dealing with more like be on there The aerospace giant asked suppliers to be ready to ship parts for the troubled 737 Max next month, a source told Reuters. Another source said that production would start in May. A third said that the coronavirus pandemic forced Boeing to delay the production restart from April to May. The 737 Max has been grounded since March 2019 following two deadly crashes. Last month, the Federal Aviation Administration said that Boeing 737 Max certification flights will start in the next few weeks, but that was before the surge of new U.S. coronavirus cases. Boeing's 737 Max factory is located in the hard-hit Seattle area where all non-essential businesses were ordered to closed earlier this week as the deaths from Covid-19 soar to over 120 in Washington. On Monday, Boeing said a production halt will begin Wednesday across the Puget Sound area and last 14 days. During that time, the company will perform additional deep cleaning activities at impacted sites. Spirit Aero Systems (SPR), the fuselage supplier for the Boeing 737 Max, said Tuesday it would suspend Boeing production March 25 until April 8. Boeing Stock Climbs On Stimulus Agreement Shares jumped 16% to 147.98 in premarket trading on the stock market today as the Senate the White House reach a deal on a coronavirus stimulus plan, which will provide $50 billion in aid to airlines and potentially billions more to aerospace manufacturers. Boeing stock is still well below its 50-day and 200-day lines and has weak IBD Composite Rating and Relative Strength Rating. Spirit Aero shares jumped 20% early Wednesday, and engine supplier General Electric GE rose 6%. Meanwhile, Fitch knocked Boeing's credit rating down two notches from A- to BBB, just two notches above junk status. The rating agency has a negative outlook on Boeing due to troubles with the 737 Max returning to service and the coronavirus pandemic. Last week,S&P Global lowered Boeing's credit rating two notches to BBB from A-, putting it at the second to last possible investment-grade score. Anything below BBB- is considered junk. Boeing's "cash flows for the next two years are going to be much weaker than we had expected," S&P said in the downgrade note, citing the Boeing 737 Max issues and the coronavirus pandemic hitting air travel. Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more. https://www.investors.com/news/boeing-stock-climbs-737-max-production-restart-near-stimulus-deal/
Boeing buyouts Boeing was already struggling. But as coronavirus has hit the airline industry, the company has begun offering early retirement and buyout packages to its workforce, following many of its airline customers who have been forced to lay off or furlough large numbers of staff. Despite suspending production of its 737 Max jet earlier this year, the Chicago-based plane maker hadn't previously announced layoffs. WSJ