Boeing seeks up to $35bn as costly strike drags on
Boeing is seeking to raise up to $35 billion from investors and banks as it deals with the financial strain of a strike by thousands of its workers, now entering its second month.
On Tuesday, the union representing over 30,000 Boeing employees held a rally in Seattle, highlighting the growing tension between the company and its workforce.
At the same time, Boeing is moving forward with plans to lay off around 17,000 employees, with redundancy notices expected by mid-November.
Negotiations to end the walkout stalled last week after Boeing withdrew a proposal that included a 30% wage increase over four years.
The company plans to raise up to $25 billion through stock and debt offerings and has secured agreements with major banks for an additional $10 billion in loans.
These moves are intended to ensure Boeing’s access to liquidity. Following the announcement, Boeing’s stock rose by 2.2%.
This effort follows the company’s recent decision to cut 10% of its workforce and its expectation of reporting a loss for the fourth quarter. The layoffs, however, will not immediately impact striking workers, who are currently excluded from the redundancies. Severance packages will be offered to those affected.
Boeing also announced that deliveries of its 777X aircraft would be delayed by a year. The company is scheduled to release its quarterly financial results on 23 October.
Credit rating agencies have warned that the ongoing strike could lead to downgrades, increasing Boeing’s borrowing costs. S&P Global estimates that the strike is costing the company about $1 billion each month.
The strike, involving a company of significant importance to the U.S. economy, has attracted attention from the Biden administration. Acting U.S. Labor Secretary Julie Su recently met with representatives from Boeing and the International Association of Machinists and Aerospace Workers (IAM) in Seattle. Meanwhile, key Washington State Democrats have called on both parties to intensify efforts to reach a resolution.
