Skift Take
With strike action crippling production and a series of expensive regulatory hurdles to navigate, this extra liquidity gives Boeing greater flexibility to top its war chest. Will it be enough to silence the company’s growing band of critics?
The Boeing Company announced Tuesday that it entered a $10 billion credit agreement. The deal with a consortium of major banks should help the troubled planemaker shore up its balance sheet.Â
Boeing is currently navigating a series of high-profile challenges including a major strike that has halted production of its best-selling 737 Max aircraft. In a statement, the company said it will pay a 0.5% funding fee for each advance made under the deal. The full terms can be viewed here.Â
In recent weeks both S&P and Moodyâs have suggested they may downgrade Boeingâs credit rating. If realized, this would almost certainly increase the cost of borrowing for the manufacturer.Â
In a statement shared with the Air Current, Emirates president Sir Tim Clark raised the possibility of Boeing encountering major financial problems. “Unless the company [Boeing] is able to raise funds through a Rights Issue, I see an imminent investment downgrade with Chapter 11 looming on the horizon,” said Clark.
Sir Tim’s intervention is particularly notable given Emirates is one of Boeing’s largest customers.
Boeing’s Worsening Week
Last week, Boeing CEO Kelly Ortberg told employees that the company is delaying the launch of its flagship 777X airliner and will lay off roughly 10% of its workforce. As part of the shake-up, around 17,000 staff are expected to lose their jobs.
âOur business is in a difficult position, and it is hard to overstate the challenges we face together,â Ortberg said in the October 11 note.
Some Wall Street estimates put the monthly cost of Boeingâs strike at nearly $1 billion. Members of the IAM labor union downed tools on September 13 in a high-stakes dispute over pay and conditions.
Last Tuesday, the planemaker withdrew its âbest and finalâ pay offer to 33,000 striking workers. This development increases the likelihood of the dispute dragging on, jeopardizing further aircraft deliveries to airlines and putting additional strain on Boeingâs balance sheet.Â
Skift has contacted Boeing for comment.
Airlines Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.
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