FTC chief says Boeing has become ‘too big to fail’

Top antitrust enforcer Lina Khan said national champion strategy has been 'catastrophic' for U.S.

"Boeing effectively became too-big-to-fail and a point of leverage for countries seeking to influence policymaking."Lina Khan

That's Federal Trade Commission Chair Lina Khan, noting that few American companies have struggled as mightily as Boeing over the past five years, and placing some of the blame at the feet of U.S. policymakers.

She criticized her predecessors for allowing a historic wave of consolidation in the aerospace industry starting in the 1980s, which left Boeing (BA) as the nation's only commercial aerospace manufacture following its 1997 merger with rival McDonnel Douglas.

Khan said that Boeing is an example of a company that has promoted itself as a "national champion" which must be shielded from antitrust enforcement because its success is important for America's success on the global stage.

"Boeing is the clearest example of a purposeful decision to bet on national champions on behalf of American interests," Khan said Wednesday at a speech on the future of American innovation at the Carnegie Endowment for International Peace.

The company is "the single best example of why a national champion strategy can be catastrophic," she added.

Khan said that Boeing's current struggles are a prime example of the harms caused by "monopolization," which lead to lower quality products, short-sighted cost cutting and overwhelming political power.

"Boeing effectively became too-big-to-fail and a point of leverage for countries seeking to influence policymaking," Khan argued, noting that Congress "carved out a $25 billion line item" for Boeing during the COVID crisis.

Boeing was able to forgo that money and issue bonds to raise the needed cash in 2020, though analysts say Federal Reserve support of corporate bond markets at the time was an important factor in the company's ability to raise money privately.

Khan said the example of Boeing should be instructive as some technology companies have argued that pursuing antitrust cases against them or otherwise regulating them will "weaken the American innovation and cede the global stage to China."

On the contrary, Khan argued, it was tough antitrust enforcement against the leading tech companies of the 1970s like AT&T (T) and Kodak (KODK) that created openings for Silicon Valley entrepreneurs to mount the information technology revolution in the subsequent decades.

"The reality is that some of these same firms are fairly integrated into China and are seeking greater access to the Chinese markets," she said. "If America's dominant firms are not prioritizing America's national interests, what should we make of the idea that they can keep American in the lead if they're left alone?"

https://www.morningstar.com/news/marketwatch/20240313319/ftc-chief-blasts-boeing-for-monopolization-says-company-has-become-too-big-to-fail