Boeing stocks slump on news of new software issues in 737 MAX software.
Boeing may be facing another crisis, a cash crunch.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | BOEING COMPANY | 324.15 | -7.85 | -2.36% |
Already slammed by the fallout from the 737 Max Jet crashes, reports have surfaced that the planemaker is seeking upward of $10 billion in loans to help deal with the ongoing situation.
CNBC was first to report that the company was in talks with various banks and has already secured “at least $6 billion” from the following institutions: Citigroup, Bank of America Merrill Lynch, Wells Fargo and J.P. Morgan.
BOEING’S NEW CEO DAVID CALHOUN LAYS OUT 2020 PRIORITIES
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| C | CITIGROUP INC. | 81.12 | +0.12 | +0.15% |
| BAC | BANK OF AMERICA CORP. | 34.71 | -0.01 | -0.03% |
| WFC | WELLS FARGO & COMPANY | 49.18 | -0.07 | -0.14% |
| JPM | JP MORGAN CHASE & CO. | 138.20 | +0.95 | +0.69% |
On the company’s October earnings conference call, former CEO Dennis Muilenburg, who has since resigned and was replaced by David Calhoun, noted that “During the quarter, we reassessed our estimate of potential considerations and other in concessions for customers for disruptions related to the 737 MAX grounding and associated delivery delays…and therefore, you can expect the impact to our cash flow to affect 2019 and beyond. We continue to see this impact to be more front-end loaded in the first few years but of course, will be dependent upon individual conversations with customers.”
BOEING, EMBRAER TO FORM JOINT VENTURE
Boeing ended the third quarter with $10.9 billion in cash and raised an additional $5.5 billion, which is earmarked for the joint venture with Embraer announced in 2018, the company noted in October. So while the company does have cash on hand, borrowing would provide more financial flexibility as the crisis drags on.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAL | AMERICAN AIRLINES GROUP INC. | 28.40 | +0.17 | +0.60% |
| LUV | SOUTHWEST AIRLINES CO. | 55.01 | -0.29 | -0.52% |
American Airlines and Southwest are among the U.S. carriers that continue to push back the return of the jet as the timing of regulatory approval remains fluid.
Additionally, the ripple effect is causing layoffs. Spirit AeroSystems Holdings and General Electric are among the suppliers shedding workers due to halted production of the 737 MAX jets.
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Emails to Boeing were not immediately returned to FOX Business.
