Boeing Taps Investment Banks as It Weighs Government Aid
Boeing Co. has tapped investment banks for help securing a financial lifeline after the coronavirus grounded most of the world’s flights and deepened the aerospace giant’s troubles.
Lazard and Evercore Inc. will help Boeing analyze government aid and potential funding from the private market, people familiar with the matter said. The U.S. Treasury Department has earmarked up to $17 billion of federal aid for Boeing and its suppliers as part of a larger rescue of the airline industry in the roughly $2 trillion stimulus package.
Analysts estimate Boeing may need to raise as much as an additional $20 billion this year to cover debt service, customer and supplier support and costs to complete joint ventures with Embraer SA.
Government aid is likely to come with strings attached, possibly limiting executive pay and stock buybacks and dividends. Some of the aid in the stimulus package also requires companies to maintain at least 90% of their current workforce until Sept. 30.
Boeing Chief Executive David Calhoun has balked at the idea of giving the U.S. government an equity stake as part of a deal, a possibility the stimulus bill envisions.
One possibility: Boeing could apply for the Treasury to buy a few billion dollars worth of its bonds and secure the rest of what it needs privately, perhaps from buyout firms or other well-heeled investors.
Before the pandemic, Chicago-based Boeing had hoped to turn a corner after two fatal crashes involving its 737 MAX planes, with plans to restart limited production of the aircraft in May. The virus forced it to indefinitely close its main assembly plants near Seattle and one in South Carolina. Its shares are down more than 50% so far this year as investors wonder when — or whether — people will start flying again.
Boeing’s market value now stands at roughly $86 billion, down from close to $190 billion at the beginning of the year. In March, it drew down on a $13.8 billion loan. The Wall Street Journal reported Thursday that the company is considering cutting its workforce by 10%, which would be expected to fall largely in the commercial unit that serves passenger airlines.
Lazard and Evercore specialize in giving advice rather than lending money. Roger Altman, Evercore’s founder and senior chairman, knows his way around Washington, having served as deputy Treasury secretary during the Clinton administration.
On the other side of the table, Treasury has tapped its own banks to help it decide how to dole out the aid to the aerospace providers, as well as to airlines and other industry players.
PJT Partners Inc. is advising on the roughly $50 billion available for commercial airlines under the stimulus bill. Moelis & Co. is working on the roughly $8 billion in aid for cargo carriers and Perella Weinberg Partners on the money for firms critical to national security, which would include Boeing.
The Treasury is expected to focus on negotiating with passenger airlines — the largest of which are American Airlines Group, Delta Air Lines Inc. and United Airlines Holdings Inc. — before turning its attention to Boeing later this month, one of the people said.