Boeing has planned to raise $35 billion amid escalating labour concerns and manufacturing bottlenecks in the last two months. The company is moving ahead with a plan to lay off 17,000 workers, with the first round of notices to be issued by the middle of November. The talks to end the strike failed as the firm withdrew an offer of a 30% pay rise over the next four years.
Boeing plans to raise $25 billion through stock and debt offerings and for the rest $10 billion, it has closed agreements with several banks. On 14 October 2024, Boeing announced through a Security and Exchange Commission(SEC) filing that it had entered a credit agreement with several banks to secure the $10 billion. Under the credit agreement with Bank of America, Citibank, Goldman Sachs and JP Morgan, Boeing will pay a funding fee of 0.5% of each advance made. In a statement to Reuters, Boeing highlighted that these are the two prudent ways to secure access to liquidity. The move to raise funding came two days after Boeing decided to cut its workforce by 10%. From certain sources, it is evident that the workforce reduction is not going to impact the workers who are on strike.
The walkout at a company of such stature seems to create some discomfort to the Biden administration as well. On Monday, the acting US Labor Secretary, Julie Su, met the representatives of the International Association of Machinists and Aerospace Workers Union(IAM) and Boeing executives in Seattle. Top Congressional Democrats have called upon Boeing to put in more efforts towards reaching an amicable solution.
2024 had been a rough year for Boeing since a plug door separated from Alaska Airlines Boeing 737 MAX after take-off on 5 January 2024. This led to a huge uproar among authorities and senate committees and sparked a major concern regarding the quality and safety practices followed during the manufacturing process at the firm. The delivery date for Boeing 777x MAX has also been pushed to 2026. Boeing plans to release its quarterly results on 23 October. Major credit rating agencies have already warned about the potential downgrades. This might further constrain the ability of the firm to raise more money.
