Boeing said Tuesday that it plans raise up to $25 billion through a combination of bonds, shares, or other securities, a move aimed at stabilizing its cash flow in the face of ongoing production issues and a major labor strike. The company’s latest plans, disclosed in a regulatory filing on Tuesday, come at a time when Boeing is grappling with halted production and a costly work stoppage.
Boeing also recently secured $10 billion in credit from multiple banks, adding another financial lifeline to its arsenal. These steps are part of a broader effort to weather a series of escalating crises.
The trouble began when the International Association of Machinists and Aerospace Workers (IAM) went on strike on September 13 after rejecting a new contract offer. The strike, involving over 33,000 workers in Boeing’s Seattle facilities, has already cost the company more than $3 billion in its first month alone, according to estimates from Anderson Economic Group. The company has also announced plans to slash its workforce by 10 percent in response to the financial hit, anticipating significant losses for the third quarter.
The surge of inflation under the Biden-Harris administration has led to a series of strikes, including those by autoworkers and port workers, as unions scramble to bring wages up to par with the cost of living. Price instability has led to labor instability.
The strike comes on top of a year filled with setbacks for Boeing. Earlier in January, a window incident on an Alaska Airlines flight involving a Boeing 737 MAX forced an emergency landing, leading to renewed scrutiny of the aircraft, which had been involved in two fatal crashes in recent years. The Federal Aviation Administration has since tightened its oversight of Boeing’s operations, restricting the company’s ability to ramp up production.
The disruption caused by the strike has now brought production of the 737 MAX to a standstill, just as Boeing was beginning to recover from previous troubles. Now, with financial losses mounting and federal oversight increasing, Boeing’s future remains uncertain as it struggles to regain its footing amid a storm of challenges.
Investors appeared to cheer the news on Tuesday, even though new issuance would dilute exist shareholders. The likely reason is that it shows the company is taking action to shore up its balance sheet.
On Friday, Boeing announced plans to cut its workforce by around 10 percent over the coming months. It employed around 171,000 people as of the end of last year 2023, including 41,000 outside the United States.
