Boeing Under Pressure: Challenges Due to Strikes and Financing Needs

Boeing is currently facing a variety of challenges affecting its stock price and corporate strategy. Following the announcement to reduce its workforce by 10% and delay the first delivery of the 777X jet to 2026, Boeing's stock fell by 2% in after-hours trading. These decisions were made in light of an ongoing strike by the International Association of Machinists and Aerospace Workers. Boeing CEO Kelly Ortberg emphasized the company's difficult situation in a message to employees. To remain competitive and meet customer needs in the long term, structural changes and tough decisions are necessary. These also include layoffs of executives and staff at all levels. The work stoppage is impacting Boeing's plans to increase production of the 737 Max jets to 38 units per month by the end of the year. Experts from S&P Global estimate the costs caused by the strike at about $1 billion per month. A potential downgrade of Boeing's credit rating could further increase financing costs, especially since S&P anticipates a cash outflow of around $10 billion in 2024. Wall Street analysts predict that Boeing might consider a stock issuance to raise capital. Discussions with investors suggest that the capital raise could exceed $10 billion, depending on the duration of the strike. Recent negotiations with the union failed, prompting Boeing to file an unfair labor practice complaint against IAM representatives. The negotiations were challenging: Boeing accused the union of misleading publicity, making it difficult to reach a solution for the employees. The strikes, ongoing since September 13, also stemmed from dissatisfaction with wage expectations and benefits. The prospect of quick progress remains subdued, but experts like labor attorney Nicole Brenecki expressed optimism that a return to the negotiating table is inevitable.