Welcome to Extreme Investor Network, where we transform ordinary business news into valuable insights that you won’t find anywhere else. Today, we’re diving into the recent turmoil at Boeing, where over 30,000 machinists went on strike after rejecting a tentative contract, costing the company more than $1 billion a month. This strike has put pressure on new CEO Kelly Ortberg as he grapples with multiple challenges faced by the plane maker.
The union and Boeing remain at an impasse, with production at factories idled, depriving Boeing of much-needed cash. Despite initial optimism about reaching a deal, workers voted overwhelmingly against the proposed labor agreement. Now, experts predict the strike could last for several more weeks, impacting both Boeing and its employees.
In a surprising move, Boeing announced plans to cut its global workforce by 10% and stop producing commercial 767 freighters by 2027. The delivery of its 777X has also been delayed further to 2026. These cuts come amid deepening financial losses and the company’s struggles to regain profitability. Ortberg faces the challenge of drumming up cash and stabilizing production amid mounting losses and investor skepticism.
S&P Global Ratings warns that Boeing faces potential credit downgrades, with ongoing production halts costing the company significantly each month. Analysts predict that Boeing may need to raise as much as $15 billion in equity to weather the storm. The company’s issues extend beyond labor disputes, impacting areas like quality, cash burn, and program execution.
The ripple effects of instability at Boeing could impact its suppliers, as seen with Spirit AeroSystems considering furloughs in response to Boeing’s cost-cutting measures. The acquisition of Spirit AeroSystems by Boeing adds another layer of complexity to the situation, as the industry faces uncertainty and challenges.
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