Jan 28, 2020

Boeing gets a bailout, but economy still faces trouble

Data: Investing.com; Chart: Axios Visuals

Boeing secured commitments of over $12 billion in financing from more than a dozen banks, CNBC reported Monday, citing unnamed sources.

Why it matters: The bailout will help Boeing maintain a healthier cash position as it deals with the fallout from a mandatory production stoppage of its 737 MAX jet after two crashes that killed hundreds of people.

  • However, Boeing's production halt will still be felt by a number of companies that rely on the aviation behemoth.
  • The stoppage also could threaten the overall U.S. economy, experts say.

The big picture: Pantheon Macroeconomics chief economist Ian Shepherdson predicts today's durable goods report will show a 2% year-over-year decline as a result of Boeing's troubles.

  • BofA Global Research revised their second quarter GDP forecast down by 0.4% as a result of Boeing's relaunch for the 737 MAX being pushed back.

Of note: As I wrote two weeks ago, Moody's has warned that Boeing's suspension could hit dozens of companies, identifying 24 with exposure to Boeing and its supply chain and placing four on review for downgrades.

  • One, Spirit Aerosystems, laid off 2,800 employees and had its credit rating downgraded.

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Justice is elusive for Boeing's 346 plane crash victims

Illustration: Aïda Amer/Axios

Boeing is navigating how to handle the $100 million compensation fund it set up for the families of crash victims, even as a pledge by its former CEO to fatten the fund seems uncertain.

Why it matters: Boeing is pulling out all stops to appease Wall Street over the grounding of its 737 MAX, but it is saying little about the issue of restitution for the families of the hundreds who died due to faulty technology onboard its flagship plane.

New York Fed says Boeing's production freeze could cut U.S. GDP growth by 20% in 2020

Photo: Roslan Rahman /AFP/Getty Images

Analysts at the New York Fed expect the all-out production stoppage on Boeing's 737 MAX will have a sizable negative impact on U.S. growth this year.

State of play: The decline will produce a 0.4% decline in GDP growth, the NY Fed's Julian di Giovanni finds.

Boeing lost money in 2019 for the first time in 20 years

A Boeing 777X airplane taking off on Jan. 25.

Boeing said it lost money last year for the first time since 1997, according to its latest quarterly report.

Why it matters: The company is mired in the biggest crisis in its history. Costs stemming from the grounding and production halt of the 737 MAX, its best-selling plane, is weighing on Boeing’s financials.

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