(Photo: REUTERS/Matt Mills McKnight)

Boeing requests massive bailout along with U.S. airlines

Tuesday, Boeing is asking for $60 billion in financial support for U.S. aerospace companies due to the drastic drop in revenue amidst the coronavirus pandemic. The coronavirus is effecting business for Boeing, making their situation even worse after the scrutiny after two of their 737 MAX models were involved in two fatal plane crashes.

Boeing claims that the financial support would flow through their suppliers and would ultimately support the U.S. aerospace industry that is taking a hard hit right now. Boeing didn’t specify how much of the $60 billion the company believes they need to make it through this financial hardship including the massive hit they took after halting the production of 737 MAX models as of January.

Boeing spent billions in revenue to produce 400 models of the 737 MAX only to have the plane’s grounded by global regulators as a result of the two fatal crashes. If the situation isn’t bad enough for Boeing, the situation is only getting worse with the decline of air travel due to the coronavirus outbreak.

Thinking about the Boeing assistance situation today? If they need $60b & are valued at $71b, then people should own it outright. This happened in transportation before with Conrail. The government formed it for $7m in ‘76, sold for $1.65b in ‘87. Return profits to taxpayers. pic.twitter.com/aHK0vdvqI1

— RAIL Magazine (@RAILMag) March 18, 2020

With the decline of the aviation industry, it’s also expected that carriers will be delaying the delivery of planes and further delays the recovery once the 737 MAX is back in service. Aircraft companies aren’t the only ones in the aviation industry as parts manufacturers are facing a decrease in business with airlines deferring maintenance and keeping airplanes grounded.

President Donald Trump disclosed at a press conference on the same day of Boeing announcement that he thinks we should support Boeing and that he will be working to help them through this financial hardship. Boeing is also facing a liquidity crisis with its stock dropping 44% as of close on Tuesday and through an SEC filing disclosed they had fully drawn $13.8 billion from a line of credit arranged just last month, according to Forbes.

Boeing isn’t the only one asking for a bailout. On Monday, U.S. airlines requested a bailout to consist of $8 billion for cargo carriers and $50 billion of passenger carriers with a series of loans and grants.