Boeing Facing Serious Trouble. The company’s $60 billion request this week caught some executives at its suppliers by surprise..By Todd Horwitz, Bubba Trading

 

Boeing Facing Serious Trouble

Boeing Co. is considering cutting its dividend and possibly laying off workers at its jetliner plants, people familiar with the matter said, as America’s largest manufacturer grapples with an unprecedented disruption to the global airline industry. The coronavirus-driven collapse in passenger traffic has forced airlines to park hundreds of planes and left them unwilling to take new ones, even as Boeing works to overcome the yearlong grounding of its 737 MAX.

The crisis has erased nearly 70% of Boeing’s market value in 2020 and threatened its production. In response, the company has pushed for a $60 billion package to support it and the aerospace manufacturing sector. It also is preparing for a potential halt in production amid the outbreak.

Boeing’s market value approached $50 billion on Thursday, with analysts ascribing more than half of the total to the Chicago-based company’s defense business versus its larger commercial-airplane division. Boeing joined U.S. airlines and other industries this week in asking for financial aid on behalf of itself, its suppliers and the broader aerospace sector.

The company’s $60 billion request this week caught some executives at its suppliers by surprise, said a senior industry executive. While the company has said 70% of its spending is with suppliers, it didn’t detail what share of any aid would be directed to them. However, Boeing’s big clout with the administration and lawmakers made it the best conduit to secure government support, the executive said.

Boeing hasn’t disclosed details, but it has said it is seeking private financing as well as taxpayer support. U.S. lawmakers are calling for conditions to accompany any aid. “Taxpayers should be paid back, and workers should be protected,” said U.S. Rep. Rick Larsen (D., Wash.), whose district includes Boeing’s Seattle-area airliner factories. Mr. Larsen is also chairman of a key U.S. House aviation subcommittee.

Todd “Bubba” Horwitz
BubbaTrading.com

 

Financial Markets and Political Commentary

 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.