In a recent report, I looked at the bailout package that Boeing requested to support the aerospace manufacturing industry, and mentioned that in a piece I had already written earlier, I found that Boeing returned $60B in recent in the past five non-crisis years and 2019.
Earlier, I had a look at what Boeing did with the $25B it borrowed during the 2019 fiscal year. It turned out that Boeing spent a considerable amount of new borrowings to make debt repayments, while roughly 30% was used to return value to shareholders in the form of dividends and share repurchases.
That's a decision that, under current circumstances, cannot be supported by the operational performance of the company but can find some support if we consider Boeing’s risky move to fund the pension plans with its own shares a couple of years ago.
The big question that arises, however, is why a company such as Boeing booking significant profits in previous years needs to borrow money. That will be the subject of this report, where we show that even despite strong earnings in recent years, the way the company prioritizes their cash usage left it with extremely little flesh on the bones to deal with dire times. To show this, we look at the revenues, earnings and cash flow operations and financing activities.
While reading this report, take into account that this piece was written even before Boeing requested a support package to support the aerospace manufacturing industry. It makes the findings of this analysis even more chilling. (end of excerpt)
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