Is it time for the Boeing Company to throw in the towel?
15.10.2024 - 12:29 / skift.com / Tim Clark / Gordon Smith / Kelly Ortberg
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.
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.
In recent weeks both S&P and Moody’s have suggested they may downgrade Boeing’s credit rating. If realized, this would almost certainly increase the cost of borrowing for the manufacturer.
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.
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.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said in the October 11 note.
Some Wall Street estimates put the monthly cost of Boeing’s 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 “best and final” 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 Boeing’s balance sheet.
Skift has contacted Boeing for comment.
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Is it time for the Boeing Company to throw in the towel?
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