- The Senate coronavirus bailout being proposed on Wednesday includes billions of dollars for Boeing, according to a new report from The Washington Post.
- A $US17 billion loan provision for companies “critical to maintaining national security” doesn’t mention Boeing by name, but was designed for the company, sources told the newspaper.
- Boeing has been hit by the COVID-19 pandemic, but bailing out the troubled company remains controversial, despite its importance to the overall economy.
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Boeing will receive billions of dollars from the Senate’s $US2 billion bailout package, which is due to be released later on Wednesday, The Washington Post reported.
The Senate package will include a $US17 billion federal loan provision for businesses considered “critical to maintaining national security.”
Boeing is not mentioned by name, according to The Post, but the paper’s sources confirmed that the loan program was crafted specifically for Boeing. Other companies could also receive a share of the $US17 billion.
The Senate bill also provides $US58 billion in relief for US airlines, which have been severely impacted by travel restrictions and demand drops as the COVID-19 pandemic has spread. The funds are split between payroll grants for airline workers, which will be distributed through the carriers, and loans to the airlines themselves.
The provision for Boeing is separate from the airline funds, and from $US425 billion in loans to companies, states, and cities hit by the crisis.
Boeing said in a March 17 statement that at least $US60 billion in aid would be needed to support the aerospace manufacturing industry. CEO Dave Calhoun has suggested that the money would be required to keep workers paid and supply chains stable.
In an interview with CNBC on Tuesday, Calhoun said the bailout would help the company keep its manufacturing and operations “warm” so that it could get up and running quickly once the pandemic begins to wane.
Boeing has about 150,000 employees worldwide, including 70,000 at its manufacturing centres in the Puget Sound area of Washington, near Seattle.
Earlier this week, Boeing said it would suspend production at its Puget Sound facilities for two weeks, after a Boeing employee died of COVID-19.
A bailout for Boeing is likely to be contentious. The company is the largest US exporter, and is generally considered vital for the country’s overall GDP.
However, public sentiment has been shifting against Boeing in recent years, as the company has come under fire for the culture and decisions that led to the 737 Max disaster, the worst crisis in the company’s history.
Two crashes of the new plane within five months killed a combined 346 people between late 2018 and early 2019. The plane type has been grounded worldwide since the second week of March 2019, as the company develops a fix and the FAA works to certify it.
Boeing entered the coronavirus crisis in a significantly weaker position than it had been in a year prior. The 737 Max crisis led to Boeing’s worst financial performance in decades, and worst order-and-delivery year in recent history, allowing Airbus to overtake it as the world’s largest aeroplane manufacturer. Former CEO Dennis Muilenburg was fired in December over his handling of Boeing’s troubles.
The company halted manufacturing of the 737 Max in January, as it was unable to deliver completed jets to customers and was running out of space to store them.
The company – along with airlines – has also drawn ire in recent weeks over past stock buybacks and shareholder dividends over the past decade, with bailout opponents arguing that the company should have saved more cash. During Tuesday’s CNBC interview, Calhoun said the company had around $US15 billion of cash available.
While Boeing’s commercial arm has been badly impacted by the near-complete halt on global air travel during the coronavirus outbreak, Calhoun said the country’s defence arm remained robust and would help the company weather the crisis.
Over the weekend, Nikki Haley, who served as US ambassador to the United Nations in the Trump administration and as governor of South Carolina, resigned from Boeing’s board over the bailout request.
“Probably I would have considered it the greatest company in the world prior to a year ago, now they get hit 15 different ways,” President Donald Trump said of Boeing in a press conference last week.