Boeing’s financial troubles continue to deepen as the company faces significant losses from an ongoing strike and rising debt. On Sunday, Boeing announced new layoffs and production delays as the machinists’ strike entered its second month. With an estimated $5 billion in losses tied to the work stoppage, Boeing’s once critical challenges are now escalating into an existential crisis. As labor disputes, safety concerns, and financial strains converge, the company’s future is becoming increasingly uncertain.
$5 Billion and Growing: The Mounting Costs of the Strike
Boeing’s struggle to navigate the strike by its 33,000 machinists is costing the company billions. According to the Anderson Economic Group, the strike has already led to $3.7 billion in lost income and dividends to shareholders, with an additional $900 million in losses to Boeing’s extensive supply chain network. The impact extends beyond Boeing, affecting 6,000 suppliers and thousands of local businesses dependent on Boeing workers’ spending.
“The costs are rising rapidly,” said Patrick Anderson, CEO of Anderson Economic Group, noting that earlier estimates of strike-related losses two weeks ago were far lower. As the work stoppage continues, the financial burden on Boeing’s suppliers and partners is expected to worsen.
From Safety Problems to Production Delays
Boeing’s current financial woes began long before the strike. In January, a mid-air failure on one of its 737 MAX planes prompted a Federal Aviation Administration (FAA) inspection, revealing systemic safety issues. This led to production caps on the 737 MAX, cutting into Boeing’s aircraft deliveries and revenue. By June, the company reported first-half losses of $33 billion, with its debt load swelling to nearly $60 billion.
The strike has now brought production to a near standstill, further intensifying the company’s troubles. Ratings agencies have hinted at downgrading Boeing’s credit to junk status, which would have significant ramifications, including preventing many institutional investors from holding its stock. In response, Boeing announced plans to cut 10% of its workforce, laying off about 17,000 employees in a move seen by some as an effort to appease the ratings agencies.
A Struggling Company on the Brink
Despite its growing financial difficulties, Boeing is taking a hard line in negotiations with its striking workers. The company withdrew its previous offer to raise wages by 30% over four years, choosing instead to hold firm against the union’s demand for a 40% wage increase. Analysts estimate that meeting the union’s demands would add $1 billion annually to Boeing’s costs—a figure dwarfed by the billions in losses the strike is already causing.
“It’s not a needle mover in terms of Boeing profitability,” said Ken Herbert, an analyst with RBC Capital Markets. “What are we waiting for here? Every day that goes by, it’s more disruptive and more of a cash drain.”
Meanwhile, Boeing announced on Friday that it would halt production of its 767 freighter aircraft and delay delivery of its 777X passenger jet until 2026—further frustrating customers and creating opportunities for rival Airbus. Emirates CEO Tim Clark expressed his frustration with Boeing’s delays, noting that the airline has had to make costly adjustments due to the company’s “multiple contractual shortfalls.”
A Desperate Bid for Survival
With its financial and operational challenges mounting, Boeing is now reportedly considering raising $10 billion in capital through new stock issues. This move is seen as a hedge against the possibility of its credit rating being downgraded to junk status. However, some industry observers view Boeing’s recent actions as increasingly desperate.
“It’s all getting a bit hand to mouth,” said Nick Cunningham, an analyst at Agency Partners LLP in London. “It is not a coherent plan as such… as they reflect existing and developing problems and are not part of a restructuring.”
Boeing’s year of turbulence shows no signs of calming, as the ongoing strike, safety concerns, and financial instability push the company to the brink. With billions in losses piling up each week, layoffs, production delays, and potential credit downgrades loom large. As Boeing fights to survive, the company faces a critical question: how long can it afford to hold firm in its negotiations before the situation spirals out of control?
