Treasury Department Selects Wall Street Banks To Advise On Airline Aid (#GotBitcoin?)
PJT Partners, Moelis, Perella Weinberg Partners expected to be tapped. Treasury Department Selects Wall Street Banks To Advise On Airline Aid (#GotBitcoin?)
The Treasury Department plans to hire three Wall Street banks for advice on doling out tens of billions of dollars in aid to the airline industry, which is hemorrhaging cash as a result of the coronavirus pandemic.
The department is expected to tap PJT Partners Inc., Moelis & Co. and Perella Weinberg Partners for help with the airline portion of the $2 trillion stimulus bill, according to people familiar with the matter. Each bank is likely to advise on aid to one of three subsectors: commercial airlines, cargo carriers and firms critical to national security, such as Boeing Co., the people said.
The assignments could be disclosed this week, though the plans could change or be delayed as they are still being finalized.
The stimulus bill, signed into law last week to ease the economic fallout from the pandemic, includes $50 billion for passenger airlines, half of it in outright grants to be used to cover payroll for six months and the rest in loans and guarantees. Lawmakers allocated another $8 billion to air-cargo carriers, $3 billion to airline contractors such as catering companies and $17 billion to companies deemed essential to national security.
The law also authorized the Treasury Department to take a stake in airlines—though the chief executive of at least one company likely to receive aid, Boeing, said if the government’s help came with an equity stake, he didn’t want it.
The airline sector is facing an existential crisis as widespread social-distancing requirements prevent regular business and leisure travel. Passenger airlines have lost billions of dollars worth of market value in recent weeks as they cancel flights and bleed cash. United Airlines Holdings Inc.’s market value, for example, has shrunk from more than $15 billion at the beginning of March to less than $7 billion today.
The Treasury Department has urged passenger and cargo airlines to submit their requests to cover payroll grants by the end of this week. In exchange for the payroll grants, carriers must agree not to furlough, lay off or cut pay for employees until Sept. 30. Assistance also hinges on companies agreeing not to buy back shares or pay dividends, and to limits on executive compensation.
Such advisory roles are highly coveted, not only for the fees they can yield but also because of the importance of the assignments to the health of the national economy. In a similar move, BlackRock Inc. was hired last week to help the Federal Reserve buy hundreds of billions of dollars of corporate bonds.
Dozens of Wall Street banks and law firms helped the government navigate through the financial crisis. Morgan Stanley advised on the cleanup of Fannie Mae and Freddie Mac, while financier Steven Rattner became the “car czar,” helping the Treasury Department restructure the big U.S. auto makers.
Boeing Offers Staff Buyouts As Coronavirus Takes Toll
Aerospace giant is pushing to control costs as aviation industry struggles with pandemic.
Boeing Co. is offering buyout packages to its workforce, the plane maker’s first major step to reduce labor costs as it grapples with the coronavirus pandemic’s deepening toll on global aviation.
A Boeing spokesman said the company expected several thousand employees to accept voluntary layoffs or retire. However, Boeing executives increasingly believe potential involuntary layoffs and production cuts may be unavoidable, depending on how the crisis unfolds, people familiar with the matter said.
“It’s important we start adjusting to our new reality now,” Chief Executive David Calhoun said in an internal email outlining the plan to Boeing employees early Thursday.
The Chicago-based aerospace giant is the largest U.S. exporter and, with its workforce of about 160,000, one of the nation’s largest manufacturing employers. It has previously announced steps including a freeze on most hiring and overtime as it seeks to preserve cash amid turmoil in the credit markets and a broader economic downturn.
While airlines around the globe have parked much of their fleets as governments close borders and order would-be passengers to stay home, the plane maker hasn’t detailed how it plans to adjust its production of passenger jets—or the size of its workforce—to meet an increasingly bleak outlook for aviation.
Mr. Calhoun, in his letter Thursday, said the voluntary layoff offer “aims to reduce the need for other workforce actions.”
Boeing’s commercial unit chief Stan Deal, in his own note to Boeing employees, described the state of the industry in stark terms, noting multiple airlines have suspended operations amid a collapse in passenger demand.
Buyouts, he said, will help Boeing prepare for a “different-sized commercial market once the recovery starts.” Some analysts forecast Boeing will cut production of wide-body aircraft, typically used in international travel, by half or more.
The plane maker employs almost 65,000 people who build commercial aircraft, with an additional 25,000 working in the unit that provides services to airlines. Boeing didn’t pursue layoffs earlier this year after suspending production of its 737 MAX jet in January.
Aviation industry officials say the new coronavirus pandemic is shaping up to be a bigger threat to aviation than the Sept. 11, 2001 terrorist attacks. “This is more horrific because it’s global,” one former Boeing executive said.
After the attacks two decades ago, Americans grew skittish about flying and demand for air travel in the U.S. dropped sharply. Soon after the attacks, Boeing moved to lay off as many as 30,000 workers and made deep cuts in production. It delivered nearly 30% fewer passenger jets the following year. General Electric Co. ’s jet-engine unit, which Mr. Calhoun led at the time, cut 4,000 jobs, or 13% of its workforce.
The three firms are known as “boutiques,” meaning they dole out advice, not money, to corporate and other clients. That means they have fewer conflicts than big banks, which have lent billions of dollars to airlines. Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,Treasury Department Selects Wall,