Boeing and Airbus are marshalling resources and preparing contingency plans as the coronavirus pandemic wreaks havoc on global travel/Bloombergby Bloomberg
Boeing has approached the White House and Congressional officials for short-term aid for itself, suppliers and airlines as the outlook for the travel industry worsens by the day because of the coronavirus outbreak.
The US planemaker is seeking to avoid layoffs and damage to hundreds of smaller companies that make parts and systems for its aircraft. Boeing has also been buffeted by the grounding of its best-selling 737 Max, which awaits regulatory clearance to resume flights after two deadly crashes.
Boeing, Airbus and a constellation of suppliers are navigating the sharpest industry downturn since at least the 9/11 terrorist attacks as nations close borders and airlines ground fleets of aircraft. Airbus said that it would pause production and assembly at French and Spanish plants for the next four days to put in place health measures, including cleaning and self-distancing.
Boeing confirmed that ongoing, positive discussions continue with government and industry leaders—including in the Trump administration and Congress. The planemaker stated that near-term access to public and private funds is key for the entire aerospace industry, which has a strong long-term outlook but an urgent challenge from the virus.
“Short-term access to public and private liquidity will be one of the most important ways for airlines, airports, suppliers and manufacturers to bridge to recovery,” said Boeing.
President Donald Trump earlier said that the US government would back the airlines 100 per cent—a point he then emphasised in a tweet. Airlines for America said that passenger carriers need $50 billion in aid, plus another $8 billion for air cargo companies.
S&P Global Ratings downgraded Boeing two notches to BBB or two steps above junk. The rating agency predicted a free cash outflow of $11 billion to $12 billion this year followed by a weaker-than-expected recovery next year as a result of the prolonged 737 Max grounding.
The rating agency said that the significant reduction in global air travel due to the coronavirus will likely result in an increase in aircraft order deferrals, further pressuring cash flows.
Boeing and Airbus are marshalling resources and preparing contingency plans as the coronavirus pandemic wreaks havoc on global travel.
Boeing said that it is coordinating with government officials on the best course of action at its Chicago plant, which makes the 747, 767 and 777 jets, as well as 787 Dreamliners. About 36,000 people are employed at the 1,000-acre site, which also includes engineering offices and a composite-wing factory.
The company has taken steps to bolster cash reserves, drawing down a $13.8 billion loan as a precaution amid tumultuous markets.