Business World

Friday 17 January 2020

Boeing 'eyeing extra debt' amid Max uncertainty

Standstill: Grounded 737 Max planes in Seattle, Washington. Photo: David Ryder/Bloomberg
Standstill: Grounded 737 Max planes in Seattle, Washington. Photo: David Ryder/Bloomberg

Christopher Jasper and Tony Robinson

Boeing fell in early trading on reports that the company is weighing a move to raise more debt following the grounding of its 737 Max, and that the jetliner's return to service could face further complications.

While Boeing had about $20bn (€18bn) in available funds at the end of the third quarter, costs stemming from the Max crisis are increasing, the 'Wall Street Journal' reported. That has prompted the company to consider raising additional debt, the paper said, citing unidentified people familiar with the matter.

Boeing is halting output of the Max, a model that has yet to gain approval to resume flights after two fatal crashes prompted a global flight ban in March.

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While the production hiatus has reduced some costs, it also means a longer wait for payments for finished planes. The Chicago-based company also faces compensation claims from airlines disrupted by the grounding, as well as from families of the crash victims.

The shares dropped 1.2pc to $328.75 before the start of regular trading in New York.

Through Friday, Boeing had slumped 21pc since the second of the crashes.

Boeing CEO Dennis Muilenburg was ousted last month and will be replaced next week by David Calhoun, a board member who took over as chairman in October.

Analysts expect Boeing to raise as much as $5bn in extra debt to help cover spending that may exceed $15bn in the first half, the 'WSJ' said.

Funds would help maintain Max production facilities and finished planes, as well as close the $4bn purchase of an 80pc stake in the airliner business of Embraer.

Meanwhile, US regulators are considering requiring pilots to complete simulator training before they can operate the Max again, the paper also reported.

The Federal Aviation Administration (FAA) originally rejected the idea since it would cause extra costs and delays, the paper said. But in recent weeks, officials said there had been increased interest among agency and industry safety experts in such training.

The FAA's formal decision is not expected until at least February, and the situation remains "fluid", according to the paper. An agency spokeswoman declined to comment on specifics, saying more analysis and testing was required.

A spokesman for the company told the paper that Boeing was "evaluating all aspects of a safe return to service, including pilot training, procedures and checklists".

The 'New York Times' also reported that Boeing was experiencing new problems with the plane that go beyond software malfunctions which played a role in the crashes.

Bloomberg

Irish Independent

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