Boeing scrambling for cash to survive 737 MAX disaster
According to new report, the Boeing Company is looking to raise more cash to help it to soften the financial blow dealt by the groundings of its once best-selling airplane, Boeing 737 MAX.
Apart from fundraising, which could amount up to $5 billion in extra debt, Boeing may also have to put off some investment and planned acquisitions, as well as cut spending on research and development, the report said citing sources.
The measures come as the company is still struggling with the aftermath of the two fatal crashes involving the 737 MAX that claimed the lives of 346 people. The 737 MAX fleet remains grounded as Boeing still has no approval from aviation regulators for the jets to return to the skies.
The company had about $20 billion in available funds at the end of the third quarter, and despite pausing the production of the troubled jet, it is still taking its toll on Boeing’s finances. While the airplane maker cannot get paid for already-made but not delivered aircraft, its customers are piling up compensation claims to make up for losses caused by the groundings.
The MAX crisis has already proven to be quite expensive for the company as the grounding cost Boeing at least $9.2 billion, according to its estimates last year. Some other analysts said that the US aerospace giant could burn from $1 billion to $2 billion a month amid the production pause.
Costs-cutting has also affected Boeing employees in the UK, where hundreds of people were reportedly stripped of their Christmas bonuses. At least they kept their jobs, unlike former CEO Dennis Muilenburg, who was fired one week before the New Year as the firm struggles to restore the trust of investors, clients, and aviation regulators.