Boeing enlists banks to advise on possible US support

NEW YORK (AFP) – Boeing enlisted investment banks Lazard and Evercore to advise it on talks with Washington on potential federal aid in the wake of the coronavirus pandemic, sources told AFP on Friday.

The talks with the United States (US) Treasury Department, which is managing a USD2.2 trillion US emergency aid package, could begin towards the end of April, said a source on condition of anonymity.

Boeing, the biggest US exporter, had sought USD60 billion in federal support for itself and the 17,000 suppliers and contractors in its supply chain. The sector employs around 2.5 million people in the US, according to the aerospace giant.

Around USD17 billion aimed at Boeing was included in the giant federal relief bill approved in March. Boeing had USD27.3 billion in debt at the end of last December as it works to complete the purchase of Brazilian company Embraer’s commercial plane operation.

US President Donald Trump again offered strong support for the company on Friday.

An image of a Boeing 737-800 airplane on a building at Boeing Co’s airplane assembly facility in Renton, Washington. PHOTO: AP

“We can’t let anything happen to Boeing,” Trump said at a White House briefing. “It’s got so much potential.”

Later in the briefing, Trump said that he thought Boeing “probably” will seek federal support.

“This isn’t a great time to sell airplanes, let’s not kid ourselves,” Trump said. “We’ll do whatever’s necessary to do.”

A stumbling block has been the question of what Washington will get in return for the support.

Boeing Chief Executive David Calhoun balked at the idea that taxpayers would receive shares in Boeing, a proposal floated by some congressional Democrats.

In talks with major airlines, Treasury officials demanded that carriers maintain their staff until at least September 30.

But Boeing is targetting a reduction of 10 per cent of its workforce in the commercial plane business, the Wall Street Journal reported. The company’s factories have been shuttered due to COVID-19.

In anticipation of complex negotiations with the Treasury, Boeing also asked Lazard and Evercore to explore private sources of funds, said a different source, confirming a report in the Wall Street Journal.

Boeing declined to comment.

Boeing also continues to be embroiled in a complex process with the Federal Aviation Administration (FAA) over efforts to win approval to resume flights on the 737 MAX, which has been grounded since March 2019 following two deadly crashes.

A key test flight of the Boeing 737 MAX has been pushed back by a month to May due to the upheaval of the coronavirus crisis, sources told AFP earlier this week.