Boeing gets $10B credit line, plans to shed stock and cut 17,000 jobs as strike wears on
Oct 15, 2024, 8:23 AM | Updated: 1:45 pm
Aerospace Machinists District 751 President Jon Holden announces that union members have rejected a proposed Boeing contract and will go on strike, following voting results at their union hall in Seattle, Washington, on September 12, 2024. (Photo: Jason Redmond, Getty Images)
(Photo: Jason Redmond, Getty Images)
Boeing received a $10 billion bank credit line with “several big banks” and is expected to siphon off as much as $25 billion in stock in a move to stay financially afloat while the machinists strike wages on.
Boeing is expected to pursue a stock offering that raises around $10 billion, according to The Wall Street Journal, and the company told investors it could issue up to $25 billion in shares or debt during the next three years while also entering into a new credit agreement with lenders.
Boeing’s strike with the International Association of Machinists and Aerospace Workers (IAM) just turned a month old this week, costing the airplane manufacturer approximately $100 million-plus per day, according to analysts. Nearly 33,000 machinists walked off the job as a way to demand higher wages, better benefits and the restoration of a defined-benefit pension plan that was eliminated a decade ago.
Machinists rallied at IAM 751 Union Hall in South Seattle on Tuesday. Meanwhile, Boeing said, “We remain committed to finding a resolution to end the strike. We will work with the union when they are ready to bargain an agreement that recognizes our employees and preserves our company’s future.”
More on the strike: Machinists, Boeing return to the bargaining table
Among the union’s demands is a 40% pay raise. Boeing most recently offered a 30% pay raise offer, but has since retracted it. Talks have since stalled despite both parties maintaining their openness to future negotiations.
Boeing has approximately $45 billion in net debt, but ended September with $10.3 billion in cash and securities, close to the minimum amount the company has said it needs to operate, according to The Wall Street Journal, in addition to the $10 billion it can acquire through selling stock.
“These are two prudent steps to support the company’s access to liquidity,” Boeing said in a statement.
Boeing also plans to cut around 17,000 jobs to avoid a credit rating downgrade. The layoffs are expected to come with 60-day layoff notices by mid-January 2025, mainly to employees in its commercial aviation division.
Round one of the Boeing 60-day layoff notices to the Boeing Commercial Airlines division will be November 17. Phase 2 will start on December 9. -per two sources to the Jason Rantz Show on @770KTTH.
— Jason Rantz on KTTH Radio (@jasonrantz) October 15, 2024
A second wave of layoffs could follow that December if the company is still struggling financially. The company hasn’t turned a profit since 2018.
“While our business is facing near-term challenges, we are making important strategic decisions for our future,” newly-appointed CEO Kelly Ortberg said in a statement.
More on Boeing’s new CEO: Kelly Ortberg starts as new Boeing CEO, will work out of company’s Seattle office
Boeing’s stock is down 19% year-over-year and down nearly 60% over the past five years, according to Trading View.
Frank Sumrall is a content editor at MyNorthwest. You can read his stories here and you can email him here.
