Boeing, the aerospace giant, is facing significant financial challenges due to a combination of factors, including a protracted strike, operational issues, and safety concerns.
In response to these challenges, the company is seeking to raise substantial funds by turning to major banks and Wall Street for assistance.
In a recent regulatory filing, Boeing announced its intention to borrow $10 billion from a consortium of banks. Additionally, it revealed plans to raise an additional $25 billion through the sale of stock and debt.
These measures are aimed at shoring up the company’s finances, which have been strained by a series of setbacks.
Over the past six years, Boeing has reported core operating losses exceeding $33 billion, with its commercial airplane production severely impacted by a month-long strike involving 33,000 members of the International Association of Machinists.
Despite efforts to resolve the strike, negotiations broke down, leading to Boeing’s new CEO, Kelly Ortberg, announcing a workforce reduction of 10%.
Boeing’s financial situation has been further complicated by a sharp increase in debt, with its credit rating falling to just above “junk bond” status.
Credit rating agencies have issued warnings about the company’s precarious position, potentially necessitating further borrowing.
The grounding of the 737 Max following two fatal crashes has also had a significant impact on Boeing’s financial health, with long-term debt reaching $53 billion as of June.
In addition to these financial woes, Boeing has faced a series of scandals and controversies, including accusations of deceiving regulators during the certification process of the 737 Max.
Whistleblowers have highlighted concerns about the company’s production practices, alleging a prioritization of profits over safety and quality.
These issues came to a head when an Alaska Airlines flight experienced a serious incident due to a manufacturing defect.
The recent strike by the International Association of Machinists represents another setback for Boeing, following the rejection of a tentative agreement that would have provided union members with a significant pay raise.
Despite efforts to sweeten the deal, the union ultimately chose to go on strike, further complicating Boeing’s recovery efforts.
Boeing’s ongoing challenges underscore the complex issues facing the aerospace industry and the significant impact that operational, safety, and financial issues can have on a major company like Boeing.
This article has been updated with additional reporting and context.
