Even as Boeing begins a 14-day production shutdown in the Puget Sound due to the coronavirus outbreak, the aerospace giant is in line for a financial booster shot, thanks to provisions in the $2 trillion relief package drawn up in the Senate.
Boeing’s stock ended the trading session with a 24% gain. Airline stocks rose as well, thanks to $50 billion in promised loans and grants for passenger airlines, and another $8 billion for cargo carriers.
The Senate bill, which hasn’t yet come up for a vote and could still undergo revision, doesn’t specifically call out Boeing. But it does set aside $17 billion in loans for businesses that are considered “critical to maintaining national security.” Sources told The Washington Post that this provision was meant to cover Boeing’s needs, although other companies could be eligible for some of that aid.
That $17 billion by itself doesn’t fully address Boeing’s request for $60 billion in assistance. Other sources of funding — public as well as private — could fill the gap.
Coronavirus Live Updates: The latest COVID-19 developments in Seattle and the world of tech
Boeing CEO David Calhoun signaled that the company had other options for getting through its current financial troubles during a Fox News interview on Tuesday. When Calhoun was asked about giving the federal government an equity stake in the company in exchange for receiving assistance, he said he didn’t care for the idea.
“If they force it, we just look at all the other options, and we’ve got plenty of them,” Calhoun said.
Boeing has been dealing with coronavirus-related setbacks that range from air travel restrictions to sick employees in the Puget Sound region, which has been hit particularly hard by the outbreak. As of today, the company is suspending airplane production operations for 14 days at its factories in Everett and Renton, as well as its airplane maintenance operations at Moses Lake in Central Washington.
The outbreak isn’t Boeing’s only challenge. It’s also dealing with the continued worldwide grounding of its 737 MAX airplanes, which led to the suspension of 737 MAX production in Renton in January. Even with today’s upward jump, Boeing’s share price is less than half of what it was at the start of the year.
Sources have told Reuters that Boeing is currently planning to restart 737 MAX production in May, and is targeting the fleet’s return to service at midyear. But that timetable depends on how the outbreak develops over the weeks ahead, and on how quickly regulators at the Federal Aviation Administration and its counterparts around the world sign off on the fixes that Boeing has made in the wake of two catastrophic 737 MAX crashes.
Like Boeing, airlines have been feeling the effects of the lockdowns and travel restrictions that have been put into place to slow the spread of the virus outbreak. International passenger flights have been almost completely suspended, and domestic travel has dried up as well.
The levels of assistance built into the Senate’s $2 trillion relief package largely reflect what the airlines were asking for, and that provided a boost to share prices. Seattle-based Alaska Air’s shares ended the trading session in the $30 range at midday, which was a 3% rise over the previous day’s close. Shares in American Airlines, United and Delta recorded double-digit percentage gains.
Update for 2:20 p.m. PT March 25: This report has been updated with closing stock prices.