21 Jun 2020
Posted in Aerospace, Defense & Security
More flexible federal aids could help Boeing stay relevant in post-COVID-19 single-aisle market, says GlobalData
The expected change of tone from the Treasury Department regarding the allocation of relief funding to companies deemed critical to national security could potentially be very beneficial for Boeing. Within the US$2.2 trillion CARES Act, US$17bn worth of loans were specifically devoted to defense companies. Boeing was rightly considered as one of the most vulnerable of the big companies, being particularly exposed on the commercial front since the air travel industry has been a major casualty of the pandemic.
Nicolas Jouan, Defense Analyst at GlobalData, comments: “Boeing has not applied for federal grants since the introduction of the CARES Act. The deadline to apply for a loan under the US$17bn devoted fund passed on May 1st with only 20 applications – none of them from Boeing. The company finds itself in a troubled situation with cumulating cancellations of orders, particularly of the grounded B737 MAX, and dubious chances to see the plane recertified before the end of the year at best. The race for post-COVID-19 recovery already started among commercial aerospace companies. However, Airbus has more arguments than Boeing at the moment, with its new narrow-body A321XLR, fuel-efficient, long-range and low-density cabin, to conquer the future single-aisle market.
“As social distancing safety will become paramount in air travel, Boeing has no plane to compete with the A321XLR and no cash to finance a new design. Conscious of these realities, and the perspective of Boeing being wiped-out from the single-aisle market, federal authorities seem ready to consider more flexible measures to allocate fresh cash to their national aerospace champion.”