Boeing Mulls Federal Relief Package That Comes With Strings
STEVE INSKEEP, HOST:
In this country, how can Boeing survive the crisis? This question matters to us all since this one company accounts for about 1% of the nation's GDP. Commercial jet factories are shut down indefinitely, meaning that more than 30,000 workers are idle in Washington state alone. Boeing lobbied for federal assistance and could get it, but the company isn't sure it likes the strings, NPR's David Schaper reports.
DAVID SCHAPER, BYLINE: This story could be told in part through the lens of supply and demand - demand for air travel has fallen off a cliff, down 95% in just March. You'd have to go back to the early 1950s to find fewer people flying. That means making airplanes for a living can be unnerving.
JON HOLDEN: Well, as you can imagine, this is a cause for great concern. It's been a bit of a roller coaster, up and down.
SCHAPER: Jon Holden of Machinists Union District 651 says Boeing workers already were concerned about their family's health and safety, but now that the plants are shut down and many aren't being paid, they worry about their financial well-being, too.
HOLDEN: We all need to pay our bills. We all need to support our families. And those are tough things right now.
SCHAPER: The market now for new commercial airplanes is just about nonexistent. Industry analyst Richard Aboulafia of the Teal Group says airlines are burning through cash and canceling or deferring orders.
RICHARD ABOULAFIA: Factory closures are possible. Massive cuts in both employment and output rates are quite possible. And of course, there's also the possibility that they just go straight to the government and say, look - we're going to have to shut our factories unless you give us some kind of financial incentive to keep people employed and things going.
SCHAPER: And that's exactly what Boeing did, requesting $60 billion in federal aid for it and its suppliers. Congress and the Trump administration made $17 billion in loans available to Boeing, and the company could apply for other assistance, but the money comes with conditions that Boeing doesn't like. One is that it can't reduce its workforce more than 10%; the other could give the federal government equity in Boeing. Speaking on Fox Business recently, CEO David Calhoun was asked if he'd accept those conditions.
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DAVID CALHOUN: You know, if they force it, we just look at all the other options. And we've got plenty of them.
SCHAPER: But then last week, Boeing hired two investment banks and signaled it may indeed accept help. This back-and-forth is creating whiplash for Washington state Democratic Congressman Rick Larsen.
RICK LARSEN: It's been kind of the bailout version of the Hokey Pokey, you know? They put their left hand in; they took their left hand out (laughter). They put their left hand in.
SCHAPER: Larsen says layoffs have already rippled through many of Boeing's 17,000 industry suppliers, like the companies that make engines or seats or lighting or thousands of other essential airplane parts.
LARSEN: There's a whole world watching here in the Pacific Northwest. The action that you take as a company has a direct impact on the lives of many here.
ABOULAFIA: This looks a lot like a negotiation to me.
SCHAPER: Analyst Richard Aboulafia says while Boeing may indeed be too big to fail, it can't ride out this storm alone.
ABOULAFIA: This is an unprecedented crisis. And if they're going to want to keep the factories open, even at a lower rate of production, well, government aid would be extremely useful.
SCHAPER: The Trump administration still must establish protocols for applying for the aid and spell out exactly what it wants in return, so Boeing probably won't say if it'll apply for that aid until it knows exactly what it'll cost.
David Schaper, NPR News.
(SOUNDBITE OF VIVID LOW SKY'S "LOW FLYING PLANES") Transcript provided by NPR, Copyright NPR.