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Boeing Falls Under $100, Lowest Since 2013, As Bailout and Liquidity Questions Unsettle Investors

Boeing Co shares are set to open at a fresh seven-year low Thursday after analysts at Cowen & Co. slashed their price target on the struggling planemaker amid questions over the fate of its $60 billion government aid request and the impact of the global coronavirus pandemic.

Cowen analyst Cai Rumohr kept his ‘market perform’ rating on Boeing in check, but lowered his price target by nearly two-thirds, to a Wall Street low of $150 per share, citing the likelihood of significant near-term production cuts as the global airline industry reels from coronavirus outbreak. Rumohr also said Boeing’s dividend could be scrapped

The move followed a grim assessment on the global airline industry from Lufthansa CEO Carsten Spohr, who warned of an “unprecedented state of emergency” brought on by the pandemic.

Boeing shares were indicated 6.8% lower in pre-market trading Thursday to indicate an opening bell price of $94.95 each, the lowest since the spring of 2013 and a move that would that would mark a 77% decline from last year’s Ethiopian airlines crash that killed 157 people and lead to the ongoing grounding of the company’s flagship 737 MAX aircraft.

Boeing said yesterday that it needs a “minimum” of $60 billion in government aid in order to support the U.S. aerospace industry’s 2.5 million jobs. Boeing didn’t indicate which portion of the aid it would need directly, but noted that it relies on at least 17,000 suppliers around the country and holds the position of the biggest U.S. exporter.

Democratic Senator Chuck Schumer, however, Tweeted yesterday that many companies now seeking government support have spent billions on share buybacks overt the past decade.

Boeing, for its part, has spent $43 billion buying back shares over the past six years.

TheStreet’s founder, Jim Cramer, warned yesterday that Boeing “will run out of money” if the bailout fails.

“There are 2 million jobs on the line, and I think we must make sure that one of, if not the most important, company in this country remains solvent,” Cramer said on CNBC. “Boeing needs this $60 billion … it’s not a plea from me, it’s a plea from the 2 million workers who are in its supply chain.”

Airlines for America, a trade group that represents the largest U.S. carriers, is also seeking around $50 billion in loans and grants and deeper tax breaks for commercial airlines,  and another $8 billion in support for the air cargo industry, in order to weather the coming months and the myriad travel restrictions put in place to combat the spread of the coronavirus.

Earlier this year, Boeing posted its first annual loss since 1997 as fourth quarter revenues plunged 39.7% to $17.11 billion and airplane orders nearly ground to a halt.

Boeing said MAX-related delay and grounding costs increased by $2.6 billion over the quarter, and just over $18. billion in total, while cash flow was measured at a negative $2.22 billion over the final three months of the year.

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