Boeing Could Tap Aid With Few Strings Attached, Analyst Says

(Bloomberg) -- As Boeing Co. considers whether to tap U.S. government assistance, one option is emerging with few strings attached, such as a requirement to give Uncle Sam an equity stake.

The planemaker is eligible to tap new lending that the Federal Reserve established last month to help prop up the crippled U.S. economy, said UBS analyst Myles Walton. He estimated that the manufacturer needs to line up $10 billion to support itself and its network of 17,000 suppliers.

As an investment-grade company, Boeing is eligible for the Fed’s Primary Market Corporate Credit Facility, which could be more attractive than requesting some of the $450 billion or so in loans that will be administered by the Treasury Department.

“There are no preconditions on restructuring, capital deployment, executive compensation or proceeds use,” Walton wrote in a note to investors Wednesday. “There are also no stipulations of any ‘taxpayer compensation,’ in the facility as there is in the CARES Act,” he said, referring to the $2.2 trillion federal relief package enacted March 27.

The stock rose 2.8% to $145.49 at 3:25 p.m. in New York, paring an 8.8% gain. Boeing had tumbled 56% this year through Tuesday, the biggest decline on the Dow Jones Industrial Average.

Boeing would be reluctant to hand over an equity stake or accept complicated terms, Chief Executive Officer Dave Calhoun has said.

“Whatever tools they put in place should be simple, straightforward and immediately accessible,” he said in a Fox Business interview last month. “And nobody has an interest in retaining government equity in their company.”

Still, it isn’t a given that the aviation titan or other recipients would be required to surrender warrants or equity to participate in the Treasury’s financing program. A Boeing spokesman reiterated that the company continues to study all of its funding alternatives while it waits for the government to release its full guidance.

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