Boeing Secures $35 Billion Amid Labor Strike and Operational Challenges

Boeing 737 max

Boeing, the Virginia-based aircraft manufacturer, is securing up to $35 billion to boost its liquidity as it deals with ongoing challenges, including a labor strike that has halted production of its popular 737 Max aircraft. The company is planning to raise $25 billion through stock and debt offerings for “general corporate purposes” and has also entered a $10 billion credit agreement with major banks, according to recent regulatory filings.

The funding arrangement includes a shelf registration that allows Boeing to issue securities over three years, offering the flexibility to support its balance sheet as needed. Boeing stated that the credit facility will provide short-term liquidity as it navigates a “challenging environment.”

The strike, which began on September 13, involves more than 32,000 factory workers at Boeing's Pacific Northwest facilities and has impacted production of the narrow-body 737 Max, as well as the wide-body 767 and 777 models. This work stoppage, which stems from disputes over wages and retirement benefits, has cost Boeing approximately $3.2 billion as of October 11, based on Anderson Economic Group estimates.

Despite three rounds of mediated talks, Boeing and the unions remain at an impasse, with both sides filing unfair labor practice complaints. Boeing withdrew its latest offer, and the US Labor Department’s acting secretary, Julie Su, met with both parties in Seattle to encourage continued negotiations.

Beyond the labor issues, Boeing faces other operational hurdles, including a regulatory limit on the monthly production rate of the 737 Max and supply chain disruptions affecting its 787 Dreamliner program. Compounding these challenges, Boeing announced on October 11 a 10% workforce reduction and further delays to the 777X program.

Boeing's focus on shoring up liquidity also includes reacquiring fuselage supplier Spirit AeroSystems in a $4.7 billion deal, which will add Spirit’s debt to Boeing’s balance sheet. With these financial moves, Boeing aims to stabilize its operations and address both immediate and longer-term challenges.