The Economy

Senate Floats Airline Stimulus Amid Criticism

Nikki Haley resigned from the Boeing board of directors and Chuck Schumer suggested banning share buybacks.
Lauren MuskettMarch 20, 2020
Senate Floats Airline Stimulus Amid Criticism

Senate Republicans announced a stimulus bill that would guarantee $150 billion in loans to companies struggling amid the coronavirus pandemic, including $58 billion in loans and grants to the U.S. aviation industry.

Lobbyists for international airlines have said $200 billion in government support is needed.

Shares of Boeing jumped 4.6% higher in early trading Friday before leveling off in the early afternoon. Boeing has said it needs $60 billion at least to protect 2.5 million jobs and shore up its position as the country’s biggest exporter.

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The company’s stock is down about 32% for the week.

Boeing’s request drew criticism from some lawmakers.

Former South Carolina Governor Nikki Haley, who served as the Trump administration’s ambassador to the United Nations, resigned from Boeing’s board this week.

“I cannot support a move to lean on the federal government for a stimulus or bailout that prioritizes our company over others and relies on taxpayers to guarantee our financial position,” Haley said, in a letter dated March 16. “The board and executive team are going in a direction I cannot support.”

Meanwhile, Senate Minority Leader Chuck Schumer, in a statement with House Leader Nancy Pelosi, said, “To earn Democratic support in the Congress, any economic stimulus proposal must include new, strong and strict provisions that prioritize and protect workers, such as banning the recipient companies from buying back stock, rewarding executives, and laying off workers.”

“We are not bailing out the airlines or other industries — period,” Richard Shelby, the Chairman of the Senate Appropriations Committee said Thursday. “Instead, we are allowing the Treasury Secretary to make or guarantee collateralized loans to industries whose operations the coronavirus outbreak has jeopardized.”

DoubleLine chief executive officer Jeffrey Gundlach, in a tweet, said the airline industry has bought back $45.5 billion of its own shares over the last ten years. “The airline industry is in essence asking the government to buy the bought back shares at a 10% profit!”