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United States: Towards a nationalization of Boeing? – World: Americas

Twelve years after the rescue of General Motors and Chrysler to avoid the death of the American automobile, the United States questions the best way to help Boeing, another industrial jewel weakened by the setbacks of the 737 MAX and the pandemic of new coronavirus which expose it to a takeover bid.

The aircraft manufacturer, which makes the presidential plane Air Force One, is asking for at least $ 60 billion (59 billion francs) in public assistance for itself and its supplier chain.

“Boeing is on the brink,” said American billionaire Bill Ackman, one of the most influential voices in American finance. “Boeing cannot survive without a bailout from the federal government,” he said on CNBC on Wednesday.

Free fall

The aircraft manufacturer is at a turning point in its history, facing two crises. He is stuck in the setbacks of the 737 MAX, nailed to the ground for more than a year after two close accidents that killed 346 people. The bill has already exceeded $ 18 billion and is expected to climb further.

The coronavirus pandemic has opened another front: airlines, which have had to interrupt transatlantic flights, have suspended all aircraft deliveries. Boeing, which has still not suspended production in its factories, no longer records any real revenue. The stock is in free fall, so that the market capitalization melted to 54 billion dollars Friday.

“We have to protect Boeing (…) We absolutely have to help Boeing,” President Donald Trump said on Tuesday.

If, in principle, the White House and Congress agree on the need to help Boeing with taxpayers’ money, the discussions stall on the form that such a rescue would take, because elected officials and experts believe that these are the choice of the group that plunged him into disaster.

The divergences explain the absence of aeronautics from the aid package of about 1000 billion dollars to save the American economy announced Thursday by the Republicans of the Senate. Several options are on the table, Boeing said on Thursday in a document to the stock market policeman, the SEC. Asked by AFP, the aircraft manufacturer, which produces civil and military aircraft, satellites and missiles, did not elaborate.

The shareholder state?

One of the most discussed hypotheses is a stake in the capital of Boeing of the federal government. “Taxpayers should have a stake in a company in exchange for their assistance, so that the general public will benefit from its investment once the company becomes stable again,” defends Democratic parliamentarian Earl Blumenauer.

What happens, according to Michel Merluzeau, expert at Air insight Research, by filing for bankruptcy via Chapter 11, the bankruptcy law allowing a company to restructure sheltered from its creditors and to bring out a “new ” business. This scenario resembles the rescue scheme of GM and Chrysler during the financial crisis.

In addition to the 17.4 billion disbursed on December 19, 2008 by the Bush administration, via the unpopular bailout of finance, known by the barbaric acronym of TARP (“Troubled Assets Relief Program”), his successor Barack Obama had then set up a specific mechanism to help the American automobile.

In total, the federal government has injected $ 81 billion in loans and securities purchases to save Chrysler and GM. The latter, which went bankrupt in June 2009, had received a total of 50 billion and the federal government had become the main shareholder of the “new GM” with 61% of the capital.

2nd largest defense supplier in the country

This nationalization which does not say its name cost taxpayers $ 11.2 billion, but saved 1.5 million American jobs, according to the Center for Automotive Research. The federal state subsequently sold Chrysler to Fiat and withdrew from GM in December 2013.

“Boeing is the country’s second largest defense supplier. What will be the impact of an equity stake on the Pentagon’s tenders, “worries Scott Hamilton, an expert at Leeham.

“An equity investment does not make sense,” adds Richard Aboulafia, at Teal Group, adding that “unlike Chrysler and GM, there are no structural problems” at Boeing. “Loans or secured loans are probably the best solution,” he says.

The federal government can also condition its aid for the division of the company into two distinct entities, with civil aviation on the one hand and military activities on the other, experts say. A third-party solution is also plausible, speculate the markets: a takeover from a competitor, like Northrop Grumman and Lockheed Martin. Contacted by AFP, neither Lockheed Martin nor Northrop declined to comment. (dpa / nxp)

Created: 20.03.2020, 21h44

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