Boeing seeks to line up billions in financing as strike goes on

By Niraj Chokshi / © 2024 The New York Times Company

Boeing on Tuesday announced steps to improve its financial position as costs mounted and a strike by its largest union entered its second month.

In two regulatory filings, the company said it could raise as much as $25 billion by selling debt or stock over the next three years and that it had entered into a $10 billion credit agreement with a group of banks, which it has not yet drawn on.

“These are two prudent steps to support the company’s access to liquidity,” the company said in a statement. The banks are BofA Securities, Citibank, Goldman Sachs Lending Partners and JPMorgan Chase.

The moves come days after Boeing revealed about $5 billion in new costs and announced a restructuring that included plans to cut 17,000 jobs, or 10% of its workforce.

The strike, which began a month ago, is costing the company tens of millions of dollars a day, according to various estimates. Most of the workers who walked out are involved in production of commercial airplanes, bringing much of that work to a virtual halt, though one major airplane program is manufactured at a nonunion factory in South Carolina.

Talks between the company and the union representing 33,000 striking employees, the International Association of Machinists and Aerospace Workers, broke down last week, with Boeing retracting its latest contract offer and each side blaming the other for intransigence.

Julie Su, the acting labor secretary, visited Seattle on Monday to meet with Boeing and the union, the union said in a statement.

The strike is very likely costing Boeing about $1.3 billion in capital a month, according to calculations by Sheila Kahyaoglu, an analyst at Jefferies, an investment bank. Given those costs and its need for more debt, raising $10 billion by selling new shares would provide the company “considerable flexibility,” she added.

Last week, S&P Global Ratings also said it was considering lowering Boeing’s credit rating, depending on how long the strike lasts, to junk status, a downgrade that would raise Boeing’s borrowing costs. The company’s debt totals nearly $58 billion, up from about $9 billion a decade ago.

And the chief executive of one of the world’s largest airlines, Tim Clark of Emirates, said recently Boeing could be forced to seek bankruptcy protection if it was not able to issue more shares to improve its financial position. “Unless the company is able to raise funds through a rights issue, I see an imminent investment downgrade with Chapter 11 looming on the horizon,” Clark told The Air Current, an aerospace news publication.

This article originally appeared in The New York Times.