The ongoing strike by Boeing’s machinists union, now in its fourth week, has taken a toll on the company’s financial standing. S&P Global Ratings has placed Boeing’s credit rating under negative watch, citing the potential for significant financial strain.
The rating agency estimates that the strike will cost Boeing approximately $10 billion in 2024, including lost production, strike-related expenses, and working capital buildup for a manufacturing process overhaul. This hefty financial burden is jeopardizing Boeing’s recovery, delaying its goal of increasing 737 Max production to 38 planes per month by the end of 2024.
The strike’s impact extends beyond immediate financial costs. It adds to Boeing’s existing challenges, which include safety concerns and the company’s decision to cut healthcare benefits for 33,000 employees during the strike. This decision has drawn strong opposition from union officials, who see it as further exacerbating the labor dispute.
The strike is also forcing Boeing to consider raising at least $10 billion through a stock issuance to replenish its cash reserves. The company has been grappling with the financial ramifications of the strike, which is estimated to cost over $1 billion per month even after cost-saving measures.
The strike’s impact on Boeing’s financial health, coupled with its other challenges, has led to a downward trend in its stock price. Boeing closed at $154.65 on Tuesday, down 0.81% for the day. In pre-market trading, the stock further declined 1.31% to $152.63. This downward trend reflects investor concerns about the strike’s potential to further strain the company’s financial position.
The strike’s resolution remains uncertain, leaving Boeing’s future outlook shrouded in uncertainty. The company’s ability to navigate these challenges will be critical to its recovery and future success.
