Space Industry and Business News  
AEROSPACE
Economic heavyweight Boeing hammered by dual crises
by Staff Writers
Washington DC (AFP) Mar 16, 2020

illustration only

Boeing lost $52 billion on the stock market in a week, a rout that underscores the challenges facing the aircraft manufacturer amid setbacks over the 737 MAX and the coronavirus pandemic.

But Boeing remains a business behemoth key to the American economy.

The industrial giant has lost all the gains amassed since President Donald Trump arrived in the White House in January 2017, which begs the question: Is the maker of the presidential plane, Air Force One, on solid financial ground?

For years, investors believed the 104-year-old company was a safe bet, because it has driven multiple technological revolutions and operates in a safe and growing market, says Richard Aboulafia, aviation expert at Teal Group.

But "these beliefs are being tested" with the 737 MAX crisis, he said.

"Boeing is in distress and a lot of that is self-inflicted."

- Short on cash? -

Boeing itself helped sow doubt this week: According to AFP banking sources, the aircraft manufacturer drew on the full $14 billion credit line it only just secured from banks last month.

That request gave the impression the company is strapped for cash, said Ken Herbert at Canaccord Genuity.

Boeing, which faces a mountain of lawsuits from families of victims of the Ethiopian Airlines and Lion Air crashes involving its troubled 737 MAX, wants to make sure it has enough reserves to deal with any unexpected problems in the current uncertain climate in the financial markets, sources familiar with the matter told AFP.

"There is no cash issue," said one source.

Contacted by AFP, the company declined to comment.

Boeing estimates that the MAX crisis will cost it at least $18.7 billion, which caused its debt to explode to $27 billion as of December 31, 2019.

The manufacturer has neither produced nor delivered any MAX aircraft, which have been grounded for a year after the second of the two deadly crashes, which together killed 346 people.

With the return to the skies uncertain, orders are in the red, and sales of the 787, its main source of income today, have slowed.

Despite these issues "we do not believe Boeing will face a cash crunch," Herbert said, but new difficulties are mounting due to the spread of the coronavirus.

- Not like the others -

The pandemic poses the most serious crisis for the airline industry since the terrorist attacks of September 11, and likely will cause airlines to postpone their purchases of planes, and even cancel orders.

Delta Air Lines has decided to postpone deliveries of new aircraft, while United Airlines will only take on new aircraft if it believes it can pay for them.

"Our desire to hang in with Boeing until the return of the 737 MAX has worked out poorly, both regarding the timeline for re-certification and now more importantly with the impact of COVID-19 on aircraft demand," said Seth Seifman at JP Morgan, who until the pandemic was among the very few Wall Street experts advising investors not to sell their Boeing shares.

But Gregori Volokhine at Meeschaert argues that Boeing "is a business like no other."

"They are so essential to the defense department that it is not a company that the government would drop," he said.

Not only does the group manufacture the KC-46 tanker as well as the F-18 and F-15 fighter jets, but it also is the leading American exporter with around 600 suppliers employing hundreds of thousands of people in the United States.

The MAX assembly plant alone employs 12,000 people. When Boeing suspended production of the MAX in January, most economists believed that this decision would affect US growth in the first half.

The impact of the Boeing crisis on the economy "is bigger than what you would see in a hurricane," said Joel Prakken, economist at IHS Markit.


Related Links
Boeing
Aerospace News at SpaceMart.com


Thanks for being here;
We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain.

With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords.

Our news coverage takes time and effort to publish 365 days a year.

If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor
$5 Billed Once


credit card or paypal
SpaceDaily Monthly Supporter
$5 Billed Monthly


paypal only


AEROSPACE
NASA's Urban Air Mobility Grand Challenge Advances with Agreement Signings
Washington DC (SPX) Mar 05, 2020
NASA has signed Space Act Agreements with 17 companies in the aviation industry to advance plans for the first in a series of technology demonstrations known as the Urban Air Mobility (UAM) Grand Challenge. The goal of the challenge is to test the capabilities and readiness of vehicles and systems that could revolutionize mobility in and around densely populated metropolitan areas. When fully implemented, UAM will provide a safe and efficient system for passenger and cargo air transportation and c ... read more

Comment using your Disqus, Facebook, Google or Twitter login.



Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle

AEROSPACE
Northrop Grumman demonstrates "On-The-Move" Ground Radar Capability

Caltech and JPL launch hybrid high rate quantum communication systems

To make ultra-black materials that won't weigh things down, consider the butterfly

Tech lifestyles enable 'safe escape' from coronavirus

AEROSPACE
L3Harris nabs $383.2M to provide man pack radio systems for Marines

Lockheed Martin's Most Advanced Mobile Communications Satellite Launches

Space and Missile Systems Center awards Northrop Grumman $253.6 million for Protected Tactical SATCOM acquisition

AEHF-5 Satellite Control Authority Transferred to Space Operations Command

AEROSPACE
AEROSPACE
China launches new BeiDou navigation satellite

Beijing to beef up support for Beidou-related industry

Regulators move to fine telecoms for selling location data

Four BeiDou satellites join system to provide services

AEROSPACE
B-2 bombers deploy to Europe

Sikorsky awarded $525.4M for production of Black Hawks for Army

Pakistan fighter jet crashes in capital during parade rehearsal

NASA's Urban Air Mobility Grand Challenge Advances with Agreement Signings

AEROSPACE
A small step for atoms, a giant leap for microelectronics

Bristol scientists demonstrate first non-volatile nano relay operation at 200C

A talented 2D material gets a new gig

Integrating electronics onto physical prototypes

AEROSPACE
Kleos Data to Target Environmental Challenges in Brazil

Space video company Sen awards multimillion-euro contract to NanoAvionics

World View Stratollite fleet to provide high resolution imagery and data analytics in the Americas

NASA images show fall in China pollution over virus shutdown

AEROSPACE
To sea turtles, stinky plastic smells like food

Micro-pollution ravaging China and South Asia: study

Toxic mineral selenium to blame for spinal deformities in California Delta fish

Plastic found in amphipods in Earth's deepest ocean trench









The content herein, unless otherwise known to be public domain, are Copyright 1995-2024 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. All articles labeled "by Staff Writers" include reports supplied to Space Media Network by industry news wires, PR agencies, corporate press officers and the like. Such articles are individually curated and edited by Space Media Network staff on the basis of the report's information value to our industry and professional readership. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. General Data Protection Regulation (GDPR) Statement Our advertisers use various cookies and the like to deliver the best ad banner available at one time. All network advertising suppliers have GDPR policies (Legitimate Interest) that conform with EU regulations for data collection. By using our websites you consent to cookie based advertising. If you do not agree with this then you must stop using the websites from May 25, 2018. Privacy Statement. Additional information can be found here at About Us.