Sorry, Boeing, the Yacht Had to Go (excerpt)
(Source: Bloomberg Opinion; published Nov. 4, 2020)
By Brooke Sutherland
How tight is Boeing Co. on cash? The planemaker is reportedly parting with a luxury mega-yacht it had kept around to wine and dine potential clients.

Boeing sold the 130-foot sea cruiser to an unidentified California property developer for $13 million, according to the Puget Sound Business Journal. The transaction moved quickly and skipped usual pre-purchase inspections, the business news site said. It’s just the latest in an accelerated dismantling of an American manufacturing powerhouse that just two years ago could seemingly do no wrong.

The aerospace giant continues to grapple with the fallout from the grounding of its top-selling 737 Max jet that has lasted more than 18 months following two fatal crashes and the dramatic plunge in air travel demand during the coronavirus pandemic. Fitch Ratings last week downgraded Boeing’s debt to BBB-, just one level above junk status, while maintaining a negative outlook.

The credit-rating company cited expectations that air traffic won’t return to 2019 levels until the end of 2023; that timetable could put further pressure on production rates and hamper Boeing’s ability to clear out a glut of undelivered planes that are piling up in parking lots.

Early on in the pandemic, Boeing toyed with the prospect of a government bailout but ultimately chose to make its own way. That choice was made easier by the Federal Reserve’s aggressive corporate bond-buying program, which kept credit markets open for the company and other borrowers.

But there’s no money coming in the door: Boeing burned through more than $5 billion of cash in the third quarter, bringing its year-to-date total to more than $15 billion. As of the end of September, it was sitting on more than $60 billion of debt. (end of excerpt)

Click here for the full story, on the Bloomberg website.


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