Boeing Under Pressure: Job Cuts and Strike Complicate Future Plans

Boeing is facing significant challenges: The stock price fell by 2% after the market closed on Friday, as the company announced it would be reducing its workforce by 10%, or approximately 17,000 jobs. Additionally, the first delivery of the 777X jet has been pushed back to 2026. These steps are a response to the ongoing strike by the International Association of Machinists and Aerospace Workers, which has been seriously impacting the company. CEO Kelly Ortberg explained to employees the necessity of making difficult decisions to implement structural changes and ensure long-term competitiveness. The job cuts affect executives as well as employees at various levels. By the end of 2023, Boeing employed about 171,000 people. This strike presents Boeing with problems on multiple fronts: Production of the popular 737 Max is supposed to increase to 38 planes monthly by the end of the year, but the work stoppage is hindering these plans. According to S&P Global, the strike is costing the company around one billion dollars a month despite implemented savings measures. Due to the financial strains, rating agency S&P has placed Boeing on CreditWatch Negative, increasing the likelihood of a downgrade. With a projected negative cash flow of around 10 billion dollars in 2024, Boeing is likely to rely on a capital increase through a share issue. Laden with approximately 58 billion dollars in debt and 12.6 billion dollars in liquid assets at the end of the second quarter, this step seems inevitable. Negotiations with the union stalled this week when Boeing filed a complaint of unfair labor practices against the IAM and withdrew its contract proposal. Boeing insisted that the union was making "unreasonable demands." A quick resolution to the strike is not in sight, especially since the union has been reluctant to engage in further talks following the recent failure of the third round of negotiations.