Boeing’s stance against taking a full federal bailout offers a long-awaited signal that the company sees a path out of its financial doldrums and production stall.
A large part of its way forward may still come through federal aid. The $2.2 trillion stimulus deal the U.S. Senate passed includes deep funding to boost the company’s business directly and indirectly. A $17 billion loan fund for businesses critical to national security can be tapped by Boeing and its suppliers. In total, the stimulus bill contains $85 billion in loans and grants for aviation-related businesses. Any lift for the sector overall stands to help Boeing.
“With supply-chain layoffs already happening, it’s important for the aerospace industry — which employs 136,000 Washingtonians — to have access to capital and liquidity,” U.S. Sen. Maria Cantwell, D-Wash., said after the deal passed.
But federal money that could flow directly to Boeing comes with strict requirements. CEO David Calhoun said in an interview Tuesday that the company wants to forge ahead without such help. If this is not unduly optimistic, both Boeing and American taxpayers will be better off for that decision. Boeing should nonetheless consider measures to increase accountability.
Calhoun wants Boeing to work its way back up without having to give up stock to the federal government, which is a necessary condition for giving stimulus money to a publicly traded company. History provides a precedent: In the 2008 bailout of General Motors, the U.S. government took a 61% share as a condition of immense loans and sold off the stock as the company rebounded. The federal government spent $11 billion more on the bailout than it received from stock sales, but the company and an estimated 1.5 million imperiled jobs survived the Great Recession.
As it did with GM, the federal government should ensure Boeing can get any help it needs. The stimulus deal appears, at this stage, to have done that — if Calhoun is right. The money should remain available until he and leadership prove that they have truly reached safe footing.
Boeing’s challenges are is unique. The 737 MAX fiasco — 346 passengers on two airplanes dead, production lines shut down and abysmal sales figures — was bad enough to hobble the company. The economy-savaging coronavirus pandemic made the awful situation even worse in financial and human costs. Boeing’s stock plummeted. The company’s Puget Sound operations stayed in production until Wednesday, well after the outbreak was spreading. An inspector of the 787 Dreamliner in Everett died from COVID-19.
Federal leaders are right to make rescue money available, and to attach meaningful conditions to it. Along with the equity stake, stimulus money would require limiting executive salaries — Calhoun is foregoing his already — and forbid stock buybacks to shore up the price. In Boeing’s specific case, the requirements should also include systemic reforms to corporate governance, including a reform of the board of directors, so oversight lapses that enabled past mistakes don’t recur.
The loan terms set in the stimulus establish well-considered corporate limitations. Boeing should prepare to accept them if need be.