Bloomberg News

Boeing Tumbles as Cantor Loss Clouds Ex-Im Bank’s Future

June 11, 2014

Boeing Facility in Long Beach

Boeing slid 2.3 percent to $134.10 at the close in New York, the steepest drop since April 10. Photographer: Patrick T. Fallon/Bloomberg

Boeing Co. (BA:US) fell the most in two months as U.S. House Majority Leader Eric Cantor’s defeat in a primary election threatens congressional reauthorization of low-cost lending that benefits the world’s largest planemaker.

Keeping alive the Export-Import Bank will be an “even more high-profile/challenging fight,” Chris Krueger, a senior policy analyst for Guggenheim Securities LLC, said today by e-mail. Boeing was the “biggest loser” besides Cantor in the Virginia Republican’s surprise loss yesterday, Krueger wrote.

Ex-Im arranges financing that helps foreign airlines buy jets, a service that Boeing said last month would support $10 billion of 2014 sales. As Congress debates reauthorization, House Financial Services Committee Chairman Jeb Hensarling of Texas is being promoted as a possible Cantor successor. He has said the U.S. should “exit the Ex-Im.”

Boeing slid 2.3 percent to $134.10 at the close in New York, the steepest drop since April 10. The decline was the biggest among 30 stocks on the Dow Jones Industrial Average and erased a year-to-date gain for the Chicago-based manufacturer.

Stocks in the U.S. and Europe declined after the World Bank cut its global growth forecast to 2.8 percent from 3.2 percent, citing weaker outlooks for the U.S., China and Russia.

John Dern, a Boeing spokesman, declined to comment about yesterday’s election results.

Financing Limit

Cantor has been an Ex-Im advocate, and his upset brings the bank’s “future into question,” two Bloomberg Industries analysts, Caitlin Webber and George Ferguson, said in a note today. “If the bank isn’t renewed by Sept. 30, the agency can’t finance new deals, though it could service existing commitments, estimated at $114 billion.”

The majority leader was upended by a Tea Party-backed challenger, David Brat, a move that may embolden more-conservative Republicans to buck party leaders. Washington-based Krueger said the bank has now been thrust into a “conservative uproar” over what critics decry as “corporate welfare.”

Boeing was also downgraded to the equivalent of hold today by Robert Stallard, a New York-based aerospace analyst with RBC Capital Markets. After the shares jumped 81 percent in 2013, Boeing is “fairly valued around current levels,” he said in a note to clients.

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net; Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net


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Companies Mentioned

  • BA
    (Boeing Co/The)
    • $131.63 USD
    • 0.39
    • 0.3%
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