Boeing used to give more money to shareholders than it made. Now it’s getting stimulus help.
Boeing used to give more money to shareholders than it made. Now it’s getting stimulus help.
Aerospace giant Boeing is seen as a big winner in the $2 trillion economic stimulus law, having successfully lobbied for tens of billions of dollars for its industry.
Treasury Secretary Mnuchin said the other day Boeing isn’t asking directly for bailout money. Washington Post columnist Allan Sloan looked into the particulars of the crisis facing Boeing and joined “Marketplace Morning Report” host David Brancaccio to discuss.
David Brancaccio: Let’s talk about Boeing. They probably could use some help. You look at the numbers … didn’t have to be that way.
Allan Sloan: Since the beginning of 2014, they’ve shelled out $61 billion in stock buybacks and dividends, which is more than the cash their business has produced.
Brancaccio: So they could have, maybe, held some around for the rainy days that we are now in. But instead they parceled out some to shareholders, as capitalism would suggest.
Sloan: Well, yeah, but capitalism also suggests you’re supposed to have a safety margin. And if they had bought back less stock, they would have less need to borrow. And, in fact, in 2019 when they ran into problems because of stuff from their 737 Max crashes, they stopped buying back but they kept paying out very handsome dividends.
Brancaccio: Very handsome dividends. So when I said “parceled out,” that didn’t quite do justice to the amount of money.
Sloan: No, they didn’t parcel it out. They sent it out with a fire hose. They took all the money they had and more and gave it to the shareholders.
Brancaccio: There is a morality tale here about lots of stock buybacks and dividends: that things can change, and big companies need to remember that conditions can suddenly turn on a dime.
Sloan: So the deal is, if you’re going to take all the money you earn, and more, and shovel it out the door, sooner or later you’re going to run into a problem.
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