Boeing Co. is studying an equity sale and other ways to ease a debt burden that has soared to $61 billion this year amid the worst slump in aviation history.
In another sign of the downturn’s depth, Boeing will trim output of its 787 Dreamliner to five a month by mid-2021, one less than previously planned, Chief Financial Officer Greg Smith said Friday. Boeing didn’t ship any of its marquee wide-body jets to customers last month, he said.
Lower Dreamliner output and a potential equity raise underscore the financial stress on Boeing even as the company’s best-selling jet, the 737 Max, emerges from a 20-month grounding. The Chicago-based planemaker took on more than $30 billion in debt earlier this year to shore up liquidity as the coronavirus pandemic swept the globe, gutting demand for air travel and new jetliners.
“When it comes to capital deployment, it will be all about paying down that debt,” Smith said at a Credit Suisse Group AG conference. “We’ll continue to invest in the business, but we’ve got to get this debt balance down. And we’ll look at every opportunity to do that in the most efficient way, including equity.”
Boeing fell 1.2% to $234.39 at 10:49 a.m. in New York. The shares soared more than 60% from the end of October through Thursday, buoyed by the Max’s return and hopes that domestic travel will snap back next year.
Boeing has sufficient reserves to see it through months of tumult until coronavirus vaccines are widely distributed, Smith said.
Demand for the 787, company’s marquee wide-body jet, has been particularly hard hit with international travel down 90% from a year ago. Inspections and repairs of previously disclosed manufacturing flaws are slowing deliveries of newly built Dreamliners, Smith said.
As a result, undelivered aircraft are starting to stack up around Boeing’s factories and in a storage lot in the California desert.
“The upshot is that the recovery is volatile and uneven, especially for international travel,” Citigroup Inc. analyst Jonathan Raviv said in a note to clients. “The financial impact is that cash usage is even worse this year due to very low 787 deliveries.”
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