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Boeing restarting commercial airplane production next week

Stock MarketsApr 16, 2020 06:50PM ET
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© Reuters. Outbreak of the coronavirus disease (COVID-19) in Everett

By David Shepardson

(Reuters) - Boeing (NYSE:BA) Co said it will resume commercial airplane production next week in Washington state after suspending operations last month in response to the coronavirus pandemic, and the company's chief executive told employees the aerospace industry will need financial help from the government.

"Our industry will need the government’s support, which will be critical to ensuring access to credit markets and likely take the form of loans versus outright grants," Boeing Chief Executive Dave Calhoun told employees in a letter seen by Reuters. "Our team continues to focus on the best ways to keep liquidity flowing through our business and to our supply chain until our customers are buying airplanes again," it said.

About 27,000 Boeing workers in the Puget Sound area will return to production of the 747, 767, 777 and 787 jet programs.

Employees in the Puget Sound for the 747, 767 and 777 will return starting April 20, while employees on the 787 program will return April 23 or April 24.

In January, Boeing halted production of the 737 MAX after two fatal crashes in five months. Employees on the 737 program in Puget Sound are returning to work starting April 20 as they resume working toward restarting MAX production, the company said.

Boeing, which said around 200 employees globally have tested positive for the coronavirus, is instituting a series of safeguards including staggering shift start times, adding floor markings and signage to create physical distance and requiring face coverings for employees at company sites in Washington.

Boeing is asking employees to perform self-health checks before coming to work and to stay home if ill. It will conduct employee wellness checks before every shift and voluntary temperature screening at many manufacturing locations.

A Boeing spokesman declined to say whether the company would seek government assistance.

Boeing said last month it wanted the government to "ensure a minimum of $60 billion in access to public and private liquidity, including loan guarantees, for the aerospace manufacturing industry."

Calhoun said in March he did not want the U.S. Treasury to take an equity stake as a condition of government loans.

At the same time, U.S. President Donald Trump has repeatedly vowed to help Boeing.

"Boeing has not asked for aid yet but I think they probably will," Trump said last week. "We can’t let anything happen to Boeing."

Last week, Boeing hired investment banks Lazard and Evercore Inc to assess potential U.S. government assistance or private sector loans, Reuters reported.

Calhoun noted Treasury and 10 airlines agreed on an aid package of nearly $25 billion, while 2,500 U.S. aircraft have been idled and passenger volume is down more than 95%.

"Knowing that the U.S. airline industry has critical financial support through this devastating wave of the virus allows us to plan our production system for the medium- and long-term impact on air travel," Calhoun said.

Congress set aside $17 billion in direct loans for national security-related companies that could be tapped by Boeing and it could also take part in a Treasury-backed Federal Reserve lending program.

Last week, Boeing suspended production of its 787 airplane at its facilities in South Carolina.

Boeing’s airline customers have deferred taking new aircraft and making pre-delivery downpayments, compounding the crisis over the grounding of Boeing’s previously fast-selling 737 MAX.

Boeing on Tuesday reported another 75 cancellations for its 737 MAX in March. Boeing's 50 planes delivered in the first three months of the year were the lowest since 1984 for the first quarter.

Boeing restarting commercial airplane production next week
 

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