December 2, 2020

Trump loosens rope on Boeing

The USA is going to rescue its aeronautical sector with 54,000 million euros. The company also ensures that the 737 MAX will fly again in the middle of the year, which has spurred investors

Boeing Until just two days ago, he appeared to be one of the patients infected by the coronavirus and whose health was deteriorating by leaps and bounds as a result of his previous pathologies. The American manufacturer based in Chicago had found that the pandemic that is raging the airline sector caught him at the most delicate moment in its history, with the crisis of the 737 Max still open on the canal. But the brutal spread of the pandemic has simultaneously become Boeing’s lifeline. When the company’s horizon seemed blacker, the Donald Trump Administration has come to the rescue of the American economy with its $ 2 trillion plan. And in parallel to this rescue, Democratic and Republican senators have agreed to lend $ 60 billion (about $ 54 billion) to the aviation sector to prevent its collapse.

The rescue comes to Boeing at the most appropriate time. A couple of weeks ago, the Bloomberg agency assured that the company would have almost exhausted the loan of 13,000 million dollars that the bank has granted it, which places it in a difficult situation. Especially given the fact that the company relies heavily on the sale of aircraft to generate revenue and its deliveries are at stake. In the first two months of the year, Boeing shipped 30 aircraft, down from 95 the year before.

The action, at random

Investors take it for granted that Boeing will take advantage of the federal government’s money to redo its battered accounts. On Friday, the manufacturer’s shares closed at a price of $ 95. Yesterday, they had already shot above $ 120, although they are still far from the $ 333 with which they opened the year. But it is not yet clear that the firm is going to borrow a public penny. Its CEO, Dave Calhoun, assured yesterday that they will not accept that the Treasury take any participation in the company as a condition of lending them money, a possibility that has not been ruled out by the Senate. “If they force us, we will look at other options. And we have many, “said Calhoun in an interview on Fox.

Along with Washington’s mana, investors have also liked the fact that Boeing has ensured that It is very likely that its 737 Max model, the trigger for its current crisis, will be operational again in the middle of the year.

Negative aspects

For now, the public bailout or the positive prospects regarding the 737 Max have weighed more in recent days on the spirits of investors than the outlook for the company in the short and medium term. For suddenly, has had to stop the activity of its Renton (Washington) factory for two weeks to disinfect it before the advance of the coronavirus. The rapid spread of the epidemic throughout the world also caused last week the risk rating agency S&P lowered its rating after warning that the pandemic may impact Boeing’s cash flow due to the cancellation of orders due to falling demand. In fact, the agency estimates it will be about -11 million dollars. Cash flow is a good indication of the health of a company because it measures its ability to meet payments.


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