Boeing Stock Rebounds on Plans to Restart Production
Boeing stock price bounced close to 8% as the most significant defence and aerospace company announced to resume operation at its Seattle-area facilities next week.
The company will resume production of the 747, 767, 777 and 787, the 737 programs with 27K employees.
The funding of almost $17bn from Federal Reserves for Boeing and its business partners would help it in resuming the business operations.
“This phased approach ensures we have a reliable supply base, our personal protective equipment is readily available and we have all of the necessary safety measures in place to resume essential work for our customers,”
Boeing has recently tapped Evercore and Lazard to help it in finding the best funding opportunities because the government relief package is coming with conditions that include reducing executive pay, retaining most workforces, and limits on capital returns.
Meanwhile, the demand for jets and other products has been declining at a sharp pace over the last two months as airlines have grounded 63% of global gets around the world due to coronavirus spread.
In addition, airlines forecast that they will take a longer time for stabilization as tourism demand will recover slowly.
Boeing is also feeling the pressure of worse impact of coronavirus on the airline’s industry; it reported that orders for 150 jets were cancelled in March, and 41 in February.
While its share price recovered slightly in the past few weeks, the share is still down 56% this year.
Some investors and analysts are showing concerns over Boeing’s debt load, which could increase to $40bn by the end of this year from $18bn at the end of last year.
“Equity markets might initially welcome Boeing’s use of the facility, but at the same time investors need to recalibrate to the company’s increasingly debt-laden capital structure,”
UBS analyst Myles Walton says.