President Donald Trump said on Tuesday that he would not let airplane maker Boeing go out of business as a result of the economic disruption caused by the coronavirus outbreak.
“We’re not letting Boeing go out of business,” Trump said in a Fox News interview. “You have to help them temporarily. It’s not going to be a long time, temporarily.”
“And they’re going to pay interest and they’re probably going to give stock in their company to the people of our country, to the taxpayers of our country, to the citizens of our country,” Trump said.
For his part, Boeing’s chief financial officer said on Tuesday the U.S. aerospace industry urgently needs credit to cope with the coronavirus pandemic but “markets essentially are closed” to new debt.
Greg Smith also stressed the strategic value of a $4.2 billion deal to acquire the commercial planemaking arm of Embraer, driving up shares in the Brazilian group.
The comments on credit in an interview with Reuters appeared to underscore the U.S. planemaker’s opposition to granting equity as part of an industry-wide government bailout deal.
U.S. lawmakers have said they could demand stock or equity-based instruments like warrants or options as a condition of government loans.
“Having access to the credit markets is really important for us right now,” Boeing CFO Greg Smith said when asked whether Boeing could issue such instruments in return for support.
Chief Executive Dave Calhoun told Fox Business earlier on Tuesday that Boeing could “take a different course” if lawmakers “attach too many things” to a stimulus package.
Boeing has sought $60 billion in U.S. government loans or loan guarantees for itself and the aerospace industry.
Congress was expected reach agreement on a stimulus and rescue package worth up to $2 trillion to respond to economic damage from the coronavirus pandemic as soon as Tuesday.
Smith said Boeing, which drew down a $13.8 credit line it took in February but has a further $9.6 billion in reserve, was not in discussions to add new commercial debt facilities.
“Not right now. The markets essentially are closed,” Smith said. “I mean, there’s really not much opportunity to raise any additional debt. That’s one of the challenges.”
Rating agency Fitch Ratings meanwhile downgraded Boeing to ‘BBB’ from ‘A-‘, citing the rapid escalation of the pandemic and its effect on Boeing’s aviation markets and operations.
Despite such immediate pressures, Smith said Boeing was beginning to see signs of a recovery in China, echoing comments by Airbus Chief Executive Guillaume Faury on Monday.
Smith also said a tie-up with Brazil planemaker Embraer remained strategically important to the company.
“As you know it’s in the middle of regulatory approval and so we are continuing to monitor that and working closely with the Embraer team,” Smith said.
“Strategically, it’s still a great partnership and we have to get through the regulatory hurdles and we’ll see how long that takes. But it still remains a priority for us.”
Shares in Embraer soared as much as 37% on his comments. In later trading they were up 24%.
Smith’s comments were the first by a senior Boeing executive since market turmoil raised uncertainty over the deal last week, because of an apparent mismatch between Embraer’s market value and the price that Boeing is due to pay for control of its commercial aircraft unit.
The tie-up has also been held up by delays in winning European Union approval. (Reporting by Eric M. Johnson in Seattle, Tim Hepher in Paris, and David Shepardson in Washington; Editing by Steve Orlofsky)