Boeing mulling equity sale, plans new cut to 787 output

Bloomberg

Boeing Co is studying an equity sale and other ways to ease a debt burden that has soared to $61 billion this year amid the worst slump in aviation history.
Adding to the financial stress, Boeing will trim output of its 787 Dreamliner to five planes a month by mid-2021, one less than previously planned, Chief Financial Officer Greg Smith said. Boeing didn’t deliver any of the marquee wide-body jets last month and December shipments will be slow as the
company inspects each aircraft for manufacturing flaws, Smith said.
Lower Dreamliner output and the potential need to sell stock underscore the pressure on Boeing even as the company’s best-selling jetliner, the 737 Max, emerges from a 20-month grounding. The planemaker took on more than $30 billion in debt earlier this year to shore up liquidity as the coronavirus pandemic swept the globe, gutting demand for air travel and new aircraft.
“When it comes to capital deployment, it will be all about paying down that debt,” Smith said at a Credit Suisse Group AG conference. “We’ll continue to invest in the business, but we’ve got to get this debt balance down. And we’ll look at every opportunity to do that in the most efficient way, including equity.”
The Chicago-based company has sufficient reserves to see
it through months of tumult until coronavirus vaccines are widely distributed, Smith said.
Boeing is already prepared to speed up deliveries of the 450 Max planes that it built but couldn’t deliver during the global grounding, Smith said. The value of the company’s inventory has soared 40% to $87 billion since the initial Max accident in October 2018.
“The constraint there won’t be our ability to deliver. It’s the pace and the ability for the customers to take them,” Smith said. “So we can turn that up pretty significantly, and we’re resourced, and the teams are trained and ready to do that.”
Demand for the 787 has been particularly hard hit, with international travel down 90% from a year ago. Boeing has repeatedly slowed work on the Dreamliner from the record 14-jet monthly pace it adopted last year. Inspections and repairs of previously disclosed structural flaws are also hampering deliveries of newly built Dreamliners, Smith said.
As a result, undelivered aircraft are starting to stack up around Boeing’s factories and in a storage lot in the California desert. It will take the planemaker through 2021 to clear them from its inventory, Smith said.
“The upshot is that the recovery is volatile and uneven, especially for international travel,” Citigroup Inc analyst Jon Raviv said in a note to clients. “The financial impact is that cash usage is even worse this year due to very low 787 deliveries.”

Ryanair tops up its Max order by 75 planes
Bloomberg

Ryanair Holdings Plc has a plan to thunder back from the air-travel slump, grabbing airport space while its weakened rivals are still in retreat.
The Irish discount airline will use the 210 737 Max
jets it’s getting from Boeing Co over the next four years — an average of one a week — to expand across Europe, Chief Executive Officer Michael O’Leary said.
“Those airports in Amsterdam, in Spain, in Italy, in Germany where they’ve seen huge capacity reductions, we’re out there today in active negotiations,” the 59-year-old CEO said. “Airports will be looking to us to recover their traffic.”
Europe’s most valuable carrier is using its financial strength to go on attack before its competitors can recover. Air traffic cratered this year after the coronavirus crisis stifled demand, and airlines are focused on saving cash. While large plane purchases are off the table for most, Ryanair topped up its Max order by 75 jets.
Ryanair opened bases in Venice, where EasyJet Plc recently reduced its presence, and Paris Beauvais airport this week. The carrier plans to serve 18 new routes from the Italian airport, it said.