Boeing Co. (BA) - Get Report shares plunged to a seven year low Wednesday after the world's second-largest planemaker said it was seeking $60 billion in aerospace industry aid from the U.S. government to combat the economic impact of the coronavirus pandemic.
Boeing said the $60 billion sought was the "minimum" needed to support the industry's 2.5 million jobs, and should come in the form of loan guarantees and access to private and public liquidity. Boeing didn't indicate which portion of the aid it would need directly, but noted that it relies on at least 17,000 suppliers around the country and holds the position of the biggest U.S. exporter.
Last night, President Donald Trump proposed a $1 trillion stimulus package to Congress, which will include billions in industry aid, amid reports Treasury Secretary Steve Mnuchin warned Republican lawmakers that the coronavirus impact could spike unemployment to as high as 20% without near-term fiscal support.
"This will be one of the most important ways for airlines, airports, suppliers and manufacturers to bridge to recovery," Boeing said in a statement "Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain."
"The long term outlook for the industry is still strong, but until global passenger traffic resumes to normal levels, these measures are needed to manage the pressure on the aviation sector and the economy as a whole," the statement added.
Boeing shares were marked 18.7% lower in early trading Wednesday to change hands at $100.91 each. That's the lowest since May 2013 and a move that would mark a 75% decline from last year's Ethiopian airlines crash that killed 157 people and lead to the ongoing grounding of the company's flagship 737 MAX aircraft.
Boeing's market cap, in fact, is now hovering around $60 billion, the same amount it is now seeking from the U.S. government.
Airlines for America, a trade group that represents the largest U.S. carriers, said yesterday that it's seeking $50 billion in loans and grants and deeper tax breaks for commercial airlines in order to weather the coming months and the myriad travel restrictions put in place to combat the spread of the coronavirus.
A4A, as it's know, also wants another $8 billion in support for the air cargo industry.
President Donald Trump raised the specter of industry support duringa press conference Monday, noting the sharp downturn was "not their fault".
"We're going to be backstopping the airlines. We’re going to be helping them very much," he told reporters in Washington, before later Tweeting the potential for "powerful" assistance from the Federal government.
Earlier this year, Boeing posted its first annual loss since 1997 as fourth quarter revenues plunged 39.7% to $17.11 billion and airplane orders nearly ground to a halt.
Boeing said MAX-related delay and grounding costs increased by $2.6 billion over the quarter, and just over $18. billion in total, while cash flow was measured at a negative $2.22 billion over the final three months of the year.