Boeing is bleeding cash. Will $10 billion do the trick?

Boeing is bleeding cash and looking for a way to plug the wound. Will $10 billion do the trick?

According to a Bloomberg report from Tuesday, Oct. 1, the troubled company is considering raising $10 billion by selling new stock. It’s not a done deal and sources said it likely would not happen until after the strike is resolved if it happens at all.

It’s expected that Boeing will have already burned through more than that amount of cash through the third quarter of this year.

“They are way behind in aircraft deliveries and losing market share fast to Airbus, and a lot of their customers are deeply aggrieved, understandably by this,” aviation analyst Richard Aboulafia told Straight Arrow News. “And of course, there are doubts about their core product line in terms of, shall we say, the reliability of the manufacturing process. So to have a strike come on top of all of this is not good.“

The machinist strike is into its third week after the union refused to vote on what was supposedly Boeing’s “best and final” offer by Friday, Sept. 27. More than 30,000 machinists walked off the job in September. It’s the company’s first work stoppage since 2008.

The strike is preventing production of the best-selling 737 MAX and other jets at a time when the company is already struggling to meet deliveries. Boeing put in hiring freezes, furloughs, leadership pay cuts and more to plug the hole, but still the first two weeks of the strike cost the company, workers and shareholders $1.4 billion, according to Anderson Economic Group.

“The company’s large backlog of orders, and the fact that it is losing both current production and future parts and service business, mean that Boeing shareholders are effectively incurring losses every day this strike continues,” AEG CEO Patrick Anderson said. “Boeing workers on strike are also losing, and as the strike goes on, more of Boeing’s suppliers will be forced to cut wages and hours.”

Boeing’s stock is down about 40% in 2024. It’s putting Boeing on track for its worst annual performance since the financial crisis of 2008. While a new stock sale would dilute current shareholders, analysts say it could help the company keep its investment-grade rating.

Moody’s Ratings put Boeing’s ratings on review for downgrade following the strike, while Fitch Ratings said, “an extended strike could have a meaningful operational and financial impact, increasing the risk of a downgrade.”

Striking union president Jon Holden told Seattle’s KUOW the union does not have any scheduled talks with Boeing this week. The last offer they received is the one they rejected last week. Holden said 80% of members say it didn’t meet their needs, while Boeing said they’re prepared to meet at any time.

“Our membership is tired of being impacted negatively by the decisions of upper leadership who have forgotten what the production system is all about and how it works and that the foundation of our production system is the most important thing,” Holden said. “Now, this company needs to be profitable, and they need to ensure that their stocks are successful, but they also have to take care of the workers that build that profit.”

The strike is far from the only dark cloud hanging over Boeing. Safety issues continue to come up, with the National Transportation Safety Board issuing an urgent safety recommendation Friday, Sept. 27, warning the rudder control component on some 737 models could get jammed in cold weather. Then, on Tuesday, Oct. 1, the NTSB scolded the Federal Aviation Administration in a letter, accusing it of not taking its warnings seriously.

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[Dfgbuiiyyyybb]

Basically bad management killed a cash cow. But they get to keep their bonuses and stay out of jail.

[dhickey]

Incompetent management shouldn't be rewarded. There should be charges of negligence brought against the executives wrecking the company.

[frankkreyssig]

Corporate greed……. without taking care of the people who make their profit.

[saulruiz]

As a IAM751 employee yeah there was some terrible decisions made and some are still being made. Investing in tools that maybe not even be needed. Always switching plans half way. Maybe if they asked the mechanics for their input they will get results after all mechanics do the work

[ptc]

Boeing management failed to listen to their customers, employees and pilots when deciding which aircraft to produce. This is the result.

[JohnSmith-kx]

Boeing should just close its doors and walk away

[johnnykheng]

Boeing could save 10 billions and agree to union.theyre the one building the airplanes and the c-suite get the bonus

[ranma]

Boeing needs to shut down 737 and layoff all workers. Go back to the drawing board and design something more reliable.

[clemnewton]

CEO needs to lose his pay for the year with everything going wrong on his time

[supmojo]

Selling new stock just to raise money means this company is close to being bankrupt.

[frankblangeard]

Quick! Buy some Boeing shares before they file for chapter 11 and the shares become worthless.

[MingTheMerciless-xskb]

I wouldn't let my in-laws ride in an un-safe boeing plane especially now that they are deparate!

[Oldguy-kt]

Easy fix. More military and firefighting planes.

[ronlee]

Working at Boeing is like being on the Titanic, after it "hit" the Iceberg . . . It would take 1200 years for the average worker to make what the last two "trainwreck" CEO's made in the last 2 years !!!

[tonyg]

Let's get the facts straight. The last offer from boeing was NOT negotiated with the union ( I AM 751). boeing had sent that straight to the union members bypassing the union. That's called illegal. Boeing employees have not had a pay rase in ten years. Boeing leaders pushed boeing employees to work way to fast bypassing safty regulations so the company could make record profits and then hold all the employees to the same safty standards when bonus time came. The boeing employees never received a max bonus in that same ten years. Every boeing employee that wasn't union had received maximum bonus payouts in that same ten years. Boeing mechanics are broke and pissed off. This is going to be a long strike. Boeing employees could always pull their VIP 401k's when on strike before this strike. The boeing company will not allow the members on strike to do this at this time. I know a woman who has cancer and now can't afford her treatment. This is NO LONGER A STRIKE. THIS IS NOW A WAR. BOEING HAS LOST MORE MONEY THEN IF THEY HAD JUST GIVEN THE MEMBERS WHAT THEY NEED TO TO LIVE.

[JohnSmith-kx]

You can blame who ever you want, but in the end both sides the union & Boeing are to blame. The best thing for Boeing to do is close its doors lay everyone off and get there act together before resuming work

[KVIZZZZLE]

shouldnt they actually be saving money since they're shut down? lol

[shelbynamels]

While the entire news media is focused on the ILA port strike, I would argue that Boeing's machinists' strike is way more significant.
Boeing is a major employer in the Pacific NW, as well as other areas. The planes they make are a significant part of our industrial base and our exports and balance of trade. They are the only ones left of our domestic civilian aircraft companies, and with their only competitor Airbus, one of two global aircraft manufacturers.

[RandomPeasant]

Not out of my pocket it won't! screw them

Make the shareholders Pony up

[McMillanScottish]

Blah blah blah how about making good planes