- Boeing on Thursday said it raised a whopping $25 billion in a bond offering and it won't seek federal aid as the aerospace giant faces the fallout from the coronavirus pandemic.
- The company is facing a dismal market for new planes as air travel demand plunges because of the virus and shelter-in-place orders.
Boeing on Thursday said it doesn't plan to seek federal aid after raising a whopping $25 billion in a bond offering, the company's biggest debt sale ever, as it faces what it expects to be a multi-year slump in air travel because of the coronavirus pandemic.
"As a result of the response, and pending the closure of this transaction expected Monday, May 4, we do not plan to seek additional funding through the capital markets or the U.S. government options at this time," it said in a statement.
The $2.2 trillion in federal coronavirus relief Congress approved last month set aside $17 billion in federal loans for companies considered of national security interest, a bill Boeing fits. Boeing's CEO Dave Calhoun has balked at the possibility of providing the government an equity stake in return for federal aid, but this week said all options were on the table.
When asked whether the company would apply for government loans Calhoun told CNBC this week that "credit markets loosened up a fair amount" recently after a number of stimulus programs.
CFO Greg Smith, in a company post about the bond offering thanked the Trump administration for the recent stimulus measures and called investors' response to Boeing's debt sale "a testament to the confidence the market has in our business, our people, and our future."
Both Boeing and its main rival Airbus are facing their biggest crises ever as demand for new jets has evaporated in the pandemic and they burn through cash. The dismal environment for new passenger planes and aircraft services is making Boeing more reliant on its defense arm.
Boeing has scrambled to shore up liquidity and recently drew down a nearly $14 billion loan. CEO Calhoun told investors on Wednesday that the company is "intensely focused on ensuring liquidity through the immediate crisis."
Boeing Wednesday reported its second consecutive quarterly loss. The company is cutting 10% of its workforce that stood at about 160,000 people at the end of last year and slashing production of planes including the 787 Dreamliner. Calhoun this week said it would likely take two to three years for travel demand to get back to 2019 levels.
The pandemic is a new crisis for the company that was already struggling from the fallout from two deadly crashes of its 737 Max that killed all 346 people on the flights. The plane has been grounded by regulators around the world since March 2019 and it isn't clear when it'll be cleared to fly again.
Correction: A previous version of this story misstated the size of the federal coronavirus relief package. It was $2.2 trillion.