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Investors are starting to worry that Boeing’s very survival may be at stake as the coronavirus pandemic continues decimate the aviation industry.

Boeing (ticker: BA) shares were sharply lower Wednesday morning after the company said it was seeking $60 billion in aid for the aerospace industry. Boeing has fully drawn on a $13.8 billion credit line and said it continues to have access to revolving credit lines arranged in October 2019, saying these credit lines have “not been drawn upon,” according to a filing last week.

Boeing stock, a Dow Jones Industrial Average component, is down 68% this year, falling 17% late Wednesday morning to $102.99. The S&P 500 was down 6%.

“Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain,” the company said in a statement.

“The long term outlook for the industry is still strong, but until global passenger traffic resumes to normal levels, these measures are needed to manage the pressure on the aviation sector and the economy as a whole,” Boeing said.

The coronavirus pandemic has caused waves of cancellations for plane orders as airlines ground their fleets and stop taking orders for new planes and parts. The pain is being felt throughout the aerospace industry, impacting Boeing and its suppliers, including General Electric (GE), Honeywell International (HON), Spirit AeroSystems (SPR), and United Technologies (UTX).

Analysts are now concerned that Boeing and its suppliers face a cash crunch.

“Boeing enters this aerospace downcycle already wounded by the MAX, and the question has started to be raised as to whether it can survive,” wrote analyst Robert Stallard of Vertical Research Partners. “Boeing was already on the ropes thanks to the grounding of the 737 MAX and now it is staring down the barrel of the biggest crisis yet to be experienced by the global aviation industry.”

Will Boeing run out of money? Not necessarily. The company said it can still tap credit lines to continue production. And if the situation continues to deteriorate, Boeing would likely be among the first major companies in line to receive a financial-aid package from the federal government because it would be deemed “too big to fail.”

But while a bailout may keep Boeing’s production lines running, it wouldn’t necessarily help equity investors. The bailout terms could leave Boeing “so encumbered with the debt that it is unable to compete effectively,” Stallard wrote. And the company hasn’t exactly built up goodwill with the public or Congress.

Indeed, as Stallard noted, Boeing says on its website that it has bought back $35 billion of shares and paid $15 billion in dividends over the past five years. “It has also paid executives egregious amounts of money and been implicated in two fatal air crashes,” he wrote. “Getting a Boeing Bail Out through the US Congress could be tricky, with terms potentially akin to TARP,” he added, referring to the aid package for banks and other firms impacted by the global financial crisis.

Boeing’s balance sheet and liquidity are now in the crosshairs as investors worry about the company’s growing debt and deteriorating credit outlook. S&P Global cut Boeing’s credit rating to BBB and kept its rating on a “negative watch” on Monday. S&P expects Boeing to post a cash outflow of $11 billion to $12 billion in 2020. Ratings firm Fitch also put Boeing on a negative credit-rating watch last week.

Boeing’s debt nearly doubled in 2019 to $27.3 billion, and is on track to peak at more than $40 billion this year, Fitch noted. “Boeing has a challenging agenda,” Fitch said, including a deal to buy the commercial aviation business of Embraer SA (ERJ), development of the 777X plane, and other new products. “Coronavirus adds another challenge,” Fitch said.

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One near-term casualty of Boeing’s rapidly declining business may be its dividend. The company hasn’t announced a cut and the stock yields 6.6% at a payout rate of $8.22 per share. Boeing shelled out $4.6 billion in dividends last year, but that is likely unsustainable now.

Analysts sound frustrated that a cut hasn’t been announced.

“Given the quickly eroding trends for global airlines along with the idiosyncratic pressures of the 737 MAX return to service, we struggle with why a suspension of BA’s dividend doesn’t occur now,” UBS analyst Myles Walton wrote in a note on Monday.

Walton said he thinks a move to a symbolic penny a share “makes the most sense and that a dividend reduction to some other level could imply that BA has a firmer footing on the slope of the challenge ahead than it probably does.”

Boeing could certainly use an extra $5 billion this year, Walton noted, writing that it could fund three months of production of the 787 planes and 25 months of 737 production, assuming a return to previous levels in the second half of the year.

Boeing suppliers are also reeling. The MAX plane represents about 30% of total Boeing sales, and it is critical for many suppliers. Spirit, for instance, derives nearly 80% of its revenue from Boeing. It makes the MAX fuselage, wing components and other parts.

Boeing needs to inject cash into suppliers to keep them solvent, especially its smaller suppliers facing more strain as production slows. “The cash Boeing needs to inject is greater than they envisioned before,” said Kenneth Herbert of Cannacord Genuity.

Write to Daren Fonda at daren.fonda@barrons.com