Seattle's Boeing Co. has found itself grappling with serious financial troubles as it enters the second month of a widespread employee strike, one that's estimated to cost the aviation giant nearly $5 billion. The strike, initiated by approximately 33,000 members of the International Association of Machinists and Aerospace Workers on September 13, has severely hampered production, bringing much of Boeing’s operations to a standstill.
Hitting the milestone of 30 days of halted work, the extent of the strike's impact on Boeing’s financial health has become unmistakable. The company has seen its stock price dip 4.22%, closing at $148.99 recently compared to $155.55 just one month prior. This downturn has pushed the firm’s market capitalization down by $4 billion, placing it at $91.80 billion.
Once hailed as a beacon of American manufacturing, Boeing is now facing multiple setbacks. The recent strike adds another challenge to the company’s already troubled history, which includes two fatal crashes of its 737 MAX jets, increasing regulatory scrutiny, and persistent production delays.
With the financial toll mounting, Boeing's leadership has announced drastic measures. CEO Kelly Ortberg shared the company’s decision to reduce its workforce by about 10%, affecting roughly 17,000 employees. Though these cuts are aimed at stemming the financial losses linked to the strike and other production delays, Ortberg acknowledged the difficulty of such decisions. "These choices may seem harsh, but they are necessary for paving the way to recovery," he stated.
The strike has not only sidelined Boeing's employees, but it has also halted negotiations concerning the machinists' demands for improved wages and benefits. After withdrawing its latest proposal from the table, Boeing has not updated its offer, prolonging the deadlock. Meanwhile, the union, which is adamant about meeting its demands, has yet to reach any agreement with the company.
More troubling yet is the specter of rating downgrades looming over Boeing. Financial analysts have begun to question the company’s capacity to meet its obligations. A recent report signaled concerns from credit ratings agencies such as Standard & Poor's, which suggested they might downgrade Boeing’s credit rating if financial conditions do not improve soon.
Reflecting on the urgent need to rectify its financial situation, Boeing has indicated plans to potentially raise up to $25 billion through new stock or debt offerings. The aircraft manufacturer hopes to shore up its balance sheet as it faces mounting losses—over $25 billion since 2018—and currently enters its second month of the employee strike.
Beyond immediate financial fixes, the strike has also captured the attention of the Biden administration. Julie Su, the acting labor secretary, made a visit to Seattle to meet with union representatives and Boeing officials, hoping to mediate some of the underlying tensions driving the work stoppage. Strikers rallied together on Tuesday, voicing their commitment to stand firm against the corporation's maneuvers. Union members expressed their solidarity, insisting they will not relent after years of what they perceive as complacency from corporate leaders.
With production of key aircraft models like the 737 MAX and 777 halted, Boeing is running out of time to stabilize its finances and restore productivity. Analysts estimate the strike could push back the company’s timeline for recovering full operational capacity. Share prices did tick slightly higher on Tuesday—up by 2%—as the market reacted to Boeing's announcements of intended financial restructuring and approval for additional credit options from major banks to bolster liquidity.
What remains clear is the immense pressure facing Boeing as it navigates this turbulent period. The company's ability to emerge from this crisis hinges on several factors: the resolution of the strike, negotiations with the machinists’ union, and restoring investor confidence through effective financial management and operational regrowth. Only the coming months will reveal how successfully Boeing can address these challenges and mend its tarnished image as one of the leading manufacturers in global aerospace.
