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  • 737 MAX crisis: Boeing in talks to borrow $10bn or more – source
  • International News

737 MAX crisis: Boeing in talks to borrow $10bn or more – source

Admin January 21, 2020

Boeing 737 MAX has unusual control challenge

Boeing Co is in talks with banks about borrowing $10 billion or more amid rising costs for the U.S. plane maker after two crashes involving its 737 MAX jetliner, a source told Reuters on Monday.

CNBC first reported the news on Monday, citing sources that Boeing has so far secured at least $6 billion from banks and is talking to other lenders for more contributions.

A source confirmed the talks to Reuters, but it was still not clear how much Boeing would seek to raise and whether it would pursue the selling of new bonds. One key issue for Boeing is flexibility since it is not clear how long the 737 MAX will remain grounded.

Boeing declined to comment.

Reuters reported on Friday that the Federal Aviation Administration is now unlikely to approve the plane’s return until March, but that could take until April or longer.

Boeing confirmed on Monday that it temporary halted production of the 737 MAX in Washington State in recent days. The company had said in December it would halt production at some point this month.

“MAX production has now been temporarily suspended inside the 737 factory. The Renton site remains open as our teams focus their work on several quality initiatives,” Boeing said, referring to its facility in Renton, Washington.

Boeing does not get paid until it delivers the planes it manufactures.

The company has estimated the costs of the 737 MAX grounding at more than $9 billion to date, and is expected to disclose significant additional costs during its fourth-quarter earnings release on Jan. 29. Boeing faces rising costs from halting production of the plane this month, compensating airlines for lost flights and assisting its supply chain.

Analysts estimate that Boeing has been losing around $1 billion a month because of the grounding. It reported an almost $3 billion negative free cash flow in the third quarter.

Boeing also reported its worst annual net orders in decades last week, along with its lowest numbers for plane deliveries in 11 years.

On Friday, Boeing said it was addressing a new 737 MAX software issue discovered in Iowa during a technical review of the proposed update for the plane.

Last week, American Airlines Group Inc and Southwest Airlines Co both said they would extend cancellations of 737 MAX flights until early June.

Also this month, the FAA and Boeing said they were reviewing a wiring issue that could potentially cause a short circuit on the 737 MAX.

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