Boeing has suspended dividend payment, extended its share buyback programme and cancelled the pay of its chief executive and board chairman for the rest of 2020, following its request for a $60 billion bailout from the US government.
On Tuesday last week the airframe maker made its appeal on the basis that 2.5 million jobs and 17,000 suppliers relied on it remaining solvent. While the stock buyback programme was initially suspended in April 2019, following the two 787 MAX crashes, Boeing’s request for aid last week ran into criticism over financial mismanagement at the company.
According to research by Bloomberg, over the previous 10 years Boeing had spent $43.44 billion, or 74% of free cash flow, on stock repurchases. On Friday, ahead of Boeing’s announcement that it was suspending dividends and executive pay former South Carolina Governor Nikki Haley resigned from the firm’s board.
In a statement accompanying her departure Haley criticised Boeing request for a bailout saying she couldn’t support a request which relied on US taxpayers to guarantee the firm’s financial position.
In contrast rival Airbus has so far not requested government aid and instead announced that it had secured board approval for a new $16 billion credit facility, while scrapping its previously announced 2019 dividend payment to conserve cash reserves. Airbus also announced it had suspended its voluntary pension top funding.
‘‘With these decisions, the Company has significant liquidity available to cope with additional cash requirements related to the coronavirus. Liquidity resources previously standing at approximately € 20 billion, comprising around € 12 billion in financial assets at hand and around € 8 million in undrawn credit lines, were further bolstered by converting an existing € 5 billion credit line into a new facility amounting to € 15 billion. Available liquidity now amounts to approximately € 30 billion,’’ said Airbus in a statement accompanying the measures.
The firm also announced the reopening of its facilities in Spain and France which it closed last week to meet the respective country’s Covid 19 restrictions.
"By maintaining production, managing its resilient backlog, supporting its customers and securing financial flexibility for its operations, Airbus intends to secure business continuity for itself even in a protracted crisis," the company said.