Boeing Suspends Buybacks And Dividends; CEO Will Work For Free Until End Of The Year

Boeing thought it could be tricky – again – and after it repurchased tens of billions in stock in the past 7 years…

… by issuing record corporate debt …

… and making its shareholders extremely rich by sending its price to all time highs, at least until the recent collapse, the company came begging, demanding a $60 billion taxpayer bailout largely to offset the consequences of the above massive debt load, with a warning that if no bailout materialized, the company may, oops, just have to fire thousands of people. And politicians wouldn’t want that, so best give Boeing the money.

Meanwhile, we learned that even as it was making such bailout demands and implicit threats – which prompted Nikki Haley to resign in disgust at the company’s pathetic panhandling – Boeing had not yet even decided to suspend a dividend to its shareholders, nor halt the buybacks that brought it to this catastrophic place.

Then, on Thursday, the plan appeared to derail when we learned that lawmakers were pushing back against a Boeing bailout – comparing it to AIG, which also required a rescue to save the company from the consequences of its own greedy, idiotic decisions.

So, in a desperate attempt to mollify legislators and to avoid further antagonizing the American population which has every right to ask why Boeing should be bailed out instead of forced to raise cash by selling its stock – you know, buybacks in reverse – the company issued a press release in which it “announced several decisions to support the company as it navigates through the COVID-19 pandemic while ensuring the company is positioned for the industry’s recovery.” These include:

• CEO Dave Calhoun and Board Chairman Larry Kellner will forgo all pay until the end of the year.

So the company plans on filing for bankruptcy at the end of the year? Got it. Anyway, moving on:

• The company will suspend its dividend until further notice.
• Boeing will extend its pause of any share repurchasing until further notice.  The company previously suspended its stock buyback program in April of 2019.

Well, yeah, of course Boeing – which just drew down on its $13BN revolver – will suspend buybacks and dividends. If it still pursued them in its current state, the whole company would literally be burned down just days before it filed for Chapter 11.

As for the CEO and Chairman forgoing all pay, how about clawing back billions in bonuses from Boeing C-Suite, starting with Dennis Muilenburg, who not only left the company picking up the pieces on the 737 MAX debacle, a plane which nobody will ever fly so it may as well just scrap it, but whose billions in buybacks assured that he would enjoy massive bonuses year after year, and quietly exit stage left – with all his vested stock no less – just before the shit hit the fan.

Our take: unless Muilenberg, and his closest execs, are clawed back for all the equity-linked bonuses they made since Boeing started repurchasing its stock in earnest in 2013, there should be no discussion of any bailout, period.

And just in case legislators do that, the press release also contained the following gentle nudge that “Boeing is drawing on all of its resources to sustain operations, support its workforce and customers, and maintain supply chain continuity through the COVID-19 crisis and for the long term.”

In other words, unless you bail us out, the “workforce” gets it. The same workforce that the company cared so much about, it decided to bury it until $25 billion in debt.