Aerospace giant Boeing recently announced plans to raise up to $25 billion through a stock and debt offering, as well as entering into a $10 billion credit agreement. This move comes as the company faces an ongoing strike by unionized machinists that has impacted production and upcoming debt payments.
The strike, which began on Sept. 13, has led to temporary pauses in production for several Boeing aircraft models, including the 737 Max, 767, 777, P-8, KC-46A Tanker, and the E-7 Wedgetail. The strike is estimated to be costing the company more than $1 billion per month and has prompted Boeing to announce a reduction of 17,000 jobs or 10% of its global workforce.
Boeing stated that the financing measures are aimed at supporting the company's access to liquidity during this challenging period. The company has not yet drawn on the newly established credit facility or its existing credit revolver.
The strike by the International Association of Machinists union, which represents 33,000 workers in Washington and Oregon, began after the union rejected a deal offering a general wage increase of 25% with a $3,000 signing bonus. The two sides remain at an impasse, with talks becoming increasingly heated as the strike continues.
Boeing's CFO Brian West previously mentioned that the company is constantly evaluating its capital structure and liquidity levels to ensure it can meet debt maturities while maintaining an investment-grade credit rating.
As negotiations between Boeing and the union continue, the company's financial decisions will likely play a crucial role in determining its future stability and growth. Analysts estimate that Boeing may need to raise between $10 billion and $15 billion to maintain its current credit ratings.