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Boeing's CEO On Coronavirus Impact On Travel, 737 MAX Update, Bond Offering

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Boeing's CEO On Coronavirus Impact On Travel, 737 MAX Update, Bond Offering

Many U.S. airliners are "reasonably confident" that a return to 30% to 50% of pre-COVID-19 capacity by the end of 2020 is possible, Boeing Co (NYSE: BA) CEO David Calhoun said in a Fox Business interview Friday. 

A 'Crawl Back' For Airline Industry

Investors expecting a swift return to 2019 traffic levels may be disappointed, as the industry will "slowly crawl back" to pre-crisis levels over a three-year period, Calhoun said.

It will take another two years afterward for the industry to resume the growth curve seen over the past 20 years, the CEO said. 

The timeline could change based on different factors, including a quicker-than-expected development of a COVID-19 vaccine that results in a "more robust" recovery, he said.

Boeing 737 MAX Update

The pandemic is far from Boeing's only problem to deal with, as the two 737 MAX crashes set the company back two years, Calhoun said.

The company continued to manufacture new MAX planes, and even if they are grounded today, the planes will ultimately "find their way into the market."

Any near-term market share losses will be erased as the MAX undergoes a "catchup" phase, he said.

Boeing's talks with the FAA regarding the certification process are "constructive" and "thorough," Calhoun said.

The work-from-home and travel restrictions do add by default additional time to any eventual certification for the MAX to return to the skies, the CEO said. 

Boeing also expects to resume 737 MAX production this month after it was suspended in January, he said. The company has already announced its plans to build fewer planes moving forward to compensate for its existing inventory.

Boeing's Bond Deal

Boeing already suspended its dividend and will prioritize the payback of its new $25-billion bond issue until "we get back to the same kind of balance sheet" that existed prior to the MAX crashes, he said. 

After that, the company will plan on how to resume cash distributions to shareholders, Calhoun said — but not until Boeing "significantly" pays down debt. 

Boeing shares were trading 3.27% higher at $132.86 at the time of publication Friday.

Related Links:

Boeing's Large Bond Deal Solves Liquidity Problem, Says Bullish Goldman Sachs

Boeing Analyst Turns Bullish After Deep Sell-Off

 

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