Boeing under Pressure: Billion-Dollar Investments and Job Cuts as a Last Resort?

Boeing plans to stabilize its balance sheet by raising up to 25 billion dollars while dealing with the impact of a prolonged strike at its production facility. This challenge has affected production for a month. The company has filed a so-called "shelf registration" as a preparation for a potential increase in equity. Additionally, Boeing announced the completion of a new credit agreement for 10 billion dollars. These measures are intended to provide the aircraft manufacturer with financial flexibility to utilize various capital options over the next three years. The strikes by union members in the Pacific Northwest, a key center of Boeing's aircraft production, are causing the company monthly losses of over one billion dollars. Supported by an estimate from S&P, Boeing remains optimistic about implementing strategic measures for cost control. Boeing is also trying to avoid possible credit rating downgrades by Moody's and S&P Global Ratings, which could classify the company in the "junk" category. Such steps would drastically increase the company's interest costs and deter certain investors. Throughout the year, Boeing has experienced several setbacks, including a production problem in January that resulted in a 737 Max ending up with a large hole in its fuselage. The stock is currently heading towards its worst annual performance since the 2008 financial crisis, and Boeing recently announced plans to cut 10% of its workforce, equating to about 17,000 jobs. Boeing will announce its quarterly figures on October 23, where the new CEO Kelly Ortberg will present the results for the first time. The company expects charges of 5 billion dollars for its two largest business units and a six-year delay on the 777X model. Leading banks in the new credit transaction included BofA Securities, Citibank, Goldman Sachs Lending Partners, and JPMorgan Chase Bank. Citibank acted as the administrative agent, while BofA, Goldman, and JPMorgan acted as co-syndication agents.