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Airbus and Boeing rush to secure new funding
April 1st 2020
The world’s two leading aircraft manufacturers, Boeing and Airbus, have temporarily paused operations at their main facilities as a result of the COVID-19. Read More » On March 23, Boeing began shutting its huge factories in greater Seattle, initially for two weeks. The decision followed the first death of a Boeing employee from the virus.
At Airbus, the European manufacturer ceased activity at its facilities in France and Spain in early March but later in the month said production and assembly work would be partially resumed “following health and safety checks after the implementation of stringent measures”.
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Both manufacturers face tough years ahead with scores of airlines expected to negotiate significant deferrals of aircraft deliveries caused by COVID-19.
Boeing said its temporary shutdown was necessary because of the “accelerating spread of the coronavirus (COVID-19) in the region”. Washington State, where Seattle is located, has declared a state wide emergency. It is one of the worst hit regions from COVID-19 in the U.S.
“This necessary step protects our employees and the communities where they work and live,” Boeing president and chief executive, David Calhoun, said in the final week of March.
The suspension affects assembly operations in Everett, where the 747, the 767, the 777 and the 787 Dreamliner are built, and the 737 production line at Renton. The shut-down includes maintenance activities at Moses Lake, Washington where 250 737 MAXs are parked following the type’s grounding 13 months ago.
Operations at Boeing’s 787 plant in South Carolina are not affected by the suspension, but the president and CEO of Boeing Commercial Airplanes, Stan Deal, said those operations were being monitored “with the working environment and safety first and foremost”.
Boeing spokesman, Bernard Choi, said the company had identified 32 confirmed COVID-19 cases among its more than 160,000 employees.
Boeing is seeking $60 billion in U.S. government aid to prop up its finances.
Airbus said it had carried out extensive work in coordination with its social partners to ensure the health and safety of its employees while securing business continuity. “The implementation of these measures required a temporary pause in production and assembly activities at the French and Spanish sites for a period of four days. Work stations will only re-open if they comply with the new health and safety measures of hygiene, cleaning and self-distancing while improving the efficiency of operations under new working conditions. The same measures are being deployed across all other sites without full interruption,” a company statement said.
In February, the Airbus Final Assembly Line in Tianjin, China, reopened following a temporary production stoppage related to the coronavirus outbreak. “Health and safety are our number one priorities at Airbus so the work stations at our sites in France and Spain will only re-open if they meet the required standards,” said Airbus CEO, Guillaume Faury.
“We try to live up to our values, humbled by the complexity of the situation, and contribute as much as we can to society in these very difficult times.”
Airbus has withdrawn its 2020 (financial) guidance due to the volatility of the situation.
Airbus management had received board approval to secure a new credit facility of US$16.2 billion in addition to an existing $3.2 billion revolving credit facility. It has withdrawn the 2019 dividend proposal of $1.94 per share, which had a cash value of approximately $1.5 billion, and suspended the voluntary top up in pension funding.
Liquidity resources previously standing at approximately $21.6 billion, comprising around $13 billion in financial assets at hand and around $8.6 billion in undrawn credit lines, were bolstered by converting an existing $5.4 billion credit line into the new facility of $16.2 billion. Available liquidity is approximately $32.4 billion, Airbus said.
