The American company Boeing announced plans to raise up to $25 billion in new capital, in addition to concluding a credit facility agreement worth $10 billion.
This step comes, according to the Financial Times, in an attempt to strengthen the company’s budget in light of a major strike involving 33,000 workers from the International Union of Machinists and Aerospace Workers, which led to the cessation of production in its factories in Washington state.
Repercussions of the strike and credit rating challenges
In a company disclosure, Boeing said that it intends to raise up to $25 billion through the issuance of new debt or shares, noting that this step aims to provide the “flexibility” necessary to obtain a variety of financing options as needed during a period extending 3 years.
The company confirmed that it has not yet withdrawn any funds from the new credit facilities. These moves come at a time when the company faces the possibility of its bonds being downgraded to a “junk” level by the credit rating agency Standard & Poor’s.
The strike strangles Boeing
The labor strike began on September 13, 2024, halting production lines for Boeing aircraft, including the best-selling 737 MAX model. Analysts the Financial Times spoke to indicated that Boeing needed to raise at least $10 billion in capital to maintain its investment-grade credit rating.
In addition to the strike, the company faced other problems related to production quality, as organizers demanded a reduction in the pace of aircraft manufacturing after a door panel detachment on one of the 737 MAX aircraft in January.
Strict procedures
In an attempt to mitigate losses, Boeing announced last Friday plans to lay off 17,000 employees, in addition to postponing the delivery date of the 777X model to 2026. The company indicated that it has $10.5 billion in cash and marketable securities by the end of September, an amount approaching… It is the minimum that a company needs to run its operations. However, Boeing recorded a cash loss of $1.3 billion during the third quarter.
New CEO Kelly Orberg, who took over in August, told employees on Friday that “recovering the company requires making tough decisions” as well as making structural changes to ensure the company remains competitive and able to meet customer needs over the long term.
