Having sparked public outrage after
demanding politely asking for a $60 billion bailout earlier this week after repurchasing tens of billions of its own shares over the past decade…
… resulting in record corporate leverage…
… leverage which now means the company is on the verge of collapse as cash flows grind to a halt, but more importantly which funded record management equity-linked bonuses and spawned some very rich shareholders, at least until this month, Boeing has finally decided to “punish” its shareholders and according to the WSJ, the aerospace giant is now considering cutting its dividend as well as launching mass layoffs at its jetliner plants, as America’s largest manufacturer grapples with an unprecedented disruption to the global airline industry.
What is shocking is that it took until the Boeing stock price lost more than two thirds of its value amid rising solvency fears, that Boeing took the “draconian” step of limiting how much cash it would syphon out to its shareholders. Maybe Boeing’s new management team was hoping to quietly sneak through not only dividend but buybacks, all funded by the upcoming multi-billion taxpayer bailout?
Oh, and it’s worth noting that Boeing – which is pretending that the bailout would go toward keeping its employees in their jobs – will also slash thousands of jobs, because if shareholders are punished, workers must be too.
To be sure, on one hand there is little Boeing could have done to prevent the fallout from a viral superbug escaping the Wuhan Institute of Virology. On the other, instead of injecting trillions into the bank accounts of its shareholders, the company could have been building a rainy day fund for times just like this because, guess what, it’s pouring.
“Nobody’s flying,” a Boeing official said. In response, Delta Air Lines this week said it had cut 70% of its flying until demand improves and is parking 600 jets, two-thirds of its fleet. It won’t take any new jets this year. Delta also said officers would take a 50% pay cut until the situation normalizes. Additionally, airlines are deferring deliveries from this year after the near-collapse in passenger traffic, and cancellations are on the rise, starving Boeing of new cash and draining liquidity in the form of deposit refunds.
That said Boeing is not alone: its European rival, Airbus, whose shares have fallen almost as much as Boeing’s this year, is also seeking government support in Europe. Its global supply network is entwined with that of Boeing, raising questions about how packages on both sides of the Atlantic could be structured.