Boeing Contemplates Increasing Debt Because Of The 737 Max Crisis: WSJ

According to a report published in the Wall Street Journal on Monday, following the grounding of its 737 Max jets, Boeing is reportedly contemplating for raising more debt for financing its activities. The report cited sources who were familiar with the issue.

According to the report, sources reportedly said that the measure of deferring some capital expenditures is also being considered by the company as well as freezing some of its proposed acquisitions and slashing down on its spending on research and development with the aim of reserving cash at hand to compensate for the loss of business because of the grounding of the 737 Max planes.

There were no comments available from Boeing about the report.

Following the global grounding in March of its best-selling plane after two fatal crashes within a space of five months that killed 346 people, the leading plane maker of the world had announced its decision to freeze production of the 737 Max planes starting this month.

The report about the raising of debts by Boeing assumed importance since a day ago, reports that Boring and the United States Federal Aviation Administration were reviewing a problem with the wiring of the grounded 737 Max planes raised concerns of a possible short circuit of the planes.

The company had removed Chief Executive Dennis Muilenburg last month after charges that he had not been able to shield the company from the fallout of the 737 Max crisis. Following the grounding of the planes, the company had slot about $9 billion because of a drop in share prices while its suppliers and client airlines were also affected.

On the other hand, Mexican airline Aeromexico said that a compensation deal about the grounded 737 Max planes had been reached by it with Boeing even a more global airlines reach settlement with the plane maker over the issue.

While the size of the deal was not disclosed by Aeromexico, the airline said that it was in touch with regulatory authorities as well as Boeing.

Back in December, the largest 737 MAX operator of the world, Southwest Airlines Co, had announced that a confidential agreement with Boeing had been reached by it to secure a part of the hit of a projected $830 million to the operating income of the company for 2019.

A similar settlement agreement had been reached with Boeing by Turkish Airlines. However the size of the payment was not specified by the airline.

It was still in talks with Boeing, European charter airline TUI has said.

(Adapted from Reuters.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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