A Disgusted Nikki Haley Quits Boeing's Board In Protest Over Bailout Demand

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by Tyler Durden
Thursday, Mar 19, 2020 - 10:05 PM

While Boeing's shareholders await to see if they will be granted a taxpayer-funded bailout, or if all those billions they greedily pocketed from the company's stock buybacks instead of forcing the company to allocate toward a rainy day fund may have doomed if not the airplane manufacturer, which will promptly re-emerge from Chapter 11 with a clean balance sheet, then themselves, today the first casualty of the Boeing crisis emerged when Nikki Haley, the former U.S. ambassador to the United Nations, announced she was leaving Boeing’s board after less than a year, saying she opposes the planemaker’s decision to seek a U.S. bailout amid the coronavirus crisis.

"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 March 16 letter that Boeing disclosed late on Thursday, one day after it was revealed that the company is seeking a $60BN bailout.

"I have long held strong convictions that this is not the role of government" she added.

Whatever one thinks of Haley, she is absolutely correct on on this issue: that Boeing wasted tens of billions to push its stock artificially higher by repurchasing its stock in hopes of lifting management equity-linked comp and making its shareholders richer instead of even pretending to plan for a less than perfect future is inexcusable, and no bailout of Boeing should ever be allowed. If Boeing needs the funds, it can sell stock and raise cash - the opposite of what it did for decades. If that is insufficient, Boeing should file a prepackaged Chapter 11 where the creditors take over all the equity and the company emerges from bankruptcy debt-free in one day.  Without a dollar of debt, Boeing should be able to weather any disruption no matter how long, and once the economy normalizes it can rehire all the workers that had been laid off.

In short, Boeing will survive but its existing shareholders will be liquidated, as they should in any system even vaguely resembling capitalism.

“Covid-19 is the biggest threat of all time to the airline/aerospace ecosystem and augurs sharp production cuts and liquidity issues” for Boeing, said Cai von Rumohr, an analyst at Cowen & Co. “It’s hard to tell where the stock may bottom.”

Well, if it bottoms at 0, so be it. It's called a bankruptcy process and countless companies have emerged from it, and gone on to a prosperous, debt-free future. And with the aid of a DIP loan - whether private or public-funded - not one Boeing employee has to lose their job, especially since with a new and clean balance sheet, Boeing will no longer face an existential crisis to produce every single day.

Haley, who was elected to two terms as South Carolina governor, is a rising star in Republican politics who is widely expected to consider a run for president herself in 2024. She is one of the few people who left President Donald Trump’s administration on good terms, finding ways to occasionally distance herself from the boss but remaining a steadfast supporter after announcing her resignation as U.N. ambassador in October 2018.