Boeing (NYSE: BA) stock price lost more than 60% of its value over the last month as coronavirus rips through the airline industry. Boeing, which is already struggling with the 737 MAX crisis, is in talks with the Trump administration about a potential aid package.
The airline industry, which Boeing supplies, has slashed flights, frozen hiring and either laid off or asked employees to take unpaid leave as passenger numbers plummet as a result of the outbreak.
The crisis comes as Boeing, led by chief executive David Calhoun (pictured), deals with the fallout of two fatal crashes of its 737 Max, its best-selling plane.
“Global airline business models will be stressed, airlines will cut capex, growth plans will be slashed and there will be airline bankruptcies,” says BofA analyst Ron Epstein. “The 737 MAX program could be especially hard hit due to its own idiosyncratic circumstances.”
Boeing’s stock price slide of 60% in a month makes it the biggest loser of Dow Jones Industrial Average – the index that is composed of 30 largest companies plunged 29% in the last month.
Boeing’s debt ratings slashed to BBB from A- by S&P. The rating agency claims that Boeing will generate much weaker cash flows in the following two years due to the 737 MAX grounding and reduction in global air travel.
Fitch has also placed the Boeing on “credit watch – negative,” saying “These [coronavirus] concurrent risks could influence the pace of 737 MAX delivery to ramp up after the [737 MAX] grounding is lifted, which could slow the rate of debt reduction from peak debt levels… which will be higher than Fitch previously expected.”
Boeing’s total debt stands around $27.9bn and the company expects to generate negative cash flows in 2020. The company had recently generated the first annual loss in more than two decades. Boeing is currently looking towards the US government for support for itself and suppliers and airlines.