Boeing is grappling with severe financial challenges exacerbated by a crippling strike, operational issues, and safety concerns, which have led the aerospace giant to turn to banks and Wall Street for financial relief.
The company is seeking to raise $10 billion through a consortium of banks and an additional $25 billion via stock and debt offerings as revealed in a regulatory filing. This effort comes in response to over $33 billion in core operating losses over the past six years, a period marked by significant setbacks.
Boeing's financial troubles are compounded by a month-long strike involving 33,000 members of the International Association of Machinists (IAM), which has stalled commercial airplane production. Recent negotiations between Boeing and the union have broken down, with no new talks scheduled.
The strike follows the rejection of a tentative contract agreement that would have given union members a 25% pay raise over four years, which the union later sought to increase to 30%. Additionally, Boeing’s new CEO, Kelly Ortberg, announced plans to cut 10% of its global workforce of 171,000 in an effort to mitigate financial losses.
Boeing's debt has surged, rising to $53 billion by June 2023, as it deals with the fallout from the 737 Max tragedies, which included two fatal crashes killing 346 people and a subsequent 20-month grounding of the aircraft.
The company has faced ongoing federal investigations, whistleblower allegations, and intense scrutiny over its production processes, including reports that safety and quality were compromised for profit.
To compound its troubles, Boeing's credit rating has dropped to the lowest investment-grade level, putting it at risk of falling into "junk bond" status, which would increase its borrowing costs.
In light of these challenges, Boeing is now seeking billions in external financing to stay afloat amid ongoing operational difficulties and financial strain.
Source:
CNN
