Boeing Stacking Up Debt, While Firing Workers to Prevent a Hard Landing

Posted on 11/02/2020

Air travel remains almost 70% below levels seen before the pandemic. Boeing Co. is in desperate need of shoring up its fiscal needs, as the airplane giant recently returned to the borrowing pit, anchoring a 4-part bond deal. Boeing said in a public filing that it may use proceeds from the bond sale to repay near-term debts. The COVID-19 pandemic has had a significant impact on Boeing’s liquidity and overall debt levels. During the nine months ended September 30, 2020, net cash used by operating activities was US$ 14.4 billion. At September 30, 2020, cash and short-term investments totaled US$ 27.1 billion. Boeing’s debt balance totaled US$ 61 billion at September 30, 2020, up from US$ 27.3 billion at December 31, 2019. Boeing is also worried that its customers may also lack sufficient liquidity to purchase new aircraft due to impacts from the pandemic.

In a bid to shore up cash, Boeing has been looking to close down offices, relocate manufacturing out of Washington state, and laying off workers. In October, Boeing disclosed that an additional 7,000 employees will be laid off. These layoffs are expected to cut through 2021, as the company adjusts to a long-term drop in air travel demand.

The Boeing Company
$1,000,000,000, 1.950% Senior Notes due 2024
$1,400,000,000, 2.750% Senior Notes due 2026
$1,100,000,000, 3.250% Senior Notes due 2028
$1,400,000,000, 3.625% Senior Notes due 2031
Source: SEC filing.

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