02 May 2020

Covid-19: Boeing selling bonds to endure pandemic

by Marc Selinger

Boeing has offered USD25 billion in bonds for sale to help it survive the aviation industry downturn caused by the coronavirus disease (Covid-19), according to the US airplane manufacturer.

Boeing said late on April 30 that its offering has generated “robust demand” and that it is pleased with the response. The transaction is slated to close on 4 May.

As a result of the response, Boeing does not plan to seek additional capital-market funding or US government aid “at this time”, the company said. Boeing had been viewed as a potential candidate for some of the industry funding included in the USD2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

“We will continue to assess our liquidity position as the health crisis and our dynamic business environment evolve,” Boeing said.

The CARES Act, which became law in late March, contains USD17 billion in loans for “businesses important to maintaining national security”, a category that seems to include Boeing because of its defence work. However, the money could come with conditions that Boeing might oppose, such as the government getting equity stakes in the companies it helps.

Boeing has been hurt by both Covid-19, which has reduced demand for new commercial airplanes, and by the more-than-a-year-long grounding of the 737 MAX commercial airliner. On 29 April, the company reported a 26% revenue decline and a USD641 million loss in the first quarter of 2020.

As well as raising money through bonds, Boeing drew down a USD13.8 billion loan early and is taking several previously announced steps to cut costs, including reducing its workforce by about 10% through employee buyouts, turnover, and layoffs.

https://www.janes.com/defence-news/news-detail/covid-19-boeing-selling-bonds-to-endure-pandemic

Boeing has offered USD25 billion in bonds for sale to help it survive the aviation industry downturn...