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Boeing may issue bonds to cover 737 Max expenses

By Philip Smith

US conglomerate could seek to raise $5bn as beleaguered plane remains grounded

Boeing is considering going to the bond markets to raise cash in the face of mounting costs over its beleaguered 737 Max aircraft.

It will be the first time since July that the US conglomerate has sought capital in such away.

Analysts estimate Boeing could seek to raise as much as $5bn from bond sales. The Wall Street Journal said Boeing needs capital to cover compensation claims from airlines and families of the 346 victims of two fatal 737 Max crashes over the course of five months in 2019.

Estimates put the amount the Seattle-based business will need in the first half of 2020 at $15bn. The balance is expected to come from reserves. The company halted the production of the plane this month as it remains grounded.

Boeing is also believed to be considering deferring some capital expenditures, freezing acquisitions and cutting spending on research and development to save cash.

In July, Fitch downgraded Boeing’s credit outlook from stable to negative. Last time Boeing went to the bond market, its offering was oversubscribed. This time, while analysts say there will be no problem raising the funds, it may cost the firm more.

FURTHER READING: Boeing stock drops as 737 Max production is suspended

FURTHER READING: Boeing fires its CEO over the 737 MAX scandal

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