Boeing machinist strike adds cash crunch to new CEO’s rescue mission
Subscribe to enjoy similar stories. A tough job just got much tougher for Boeing’s new CEO. When the jet maker’s largest union went on strike Friday, the walkout compounded the list of problems facing Kelly Ortberg, who took Boeing’s top job five weeks ago.
Among them: rapid cash burn, a struggling supply base and a manufacturing quality crisis. Hours after the walkout, debt-ratings firms warned that a prolonged work stoppage would prompt them to downgrade Boeing debt into junk status. With more than $45 billion in net debt, a ratings hit would drive up borrowing costs and hamper fundraising efforts.
Boeing shares on Friday fell nearly 4%, nearing a two-year low. The jet maker burned through more than $1 billion a month in the year’s first half and warned in July that the company would burn between $5 billion and $10 billion in cash this year. Largely to blame is Boeing’s slowed production of the 737 as the company works to address quality issues after a door plug blew off in midair on an Alaska Air flight in January.
The company is struggling with production slowdowns on other models, too, because of supplier shortages and other issues. Its defense business, which makes F-15 jet fighters and Chinook helicopters for the Pentagon, is also unprofitable. Boeing’s Starliner spacecraft faces an uncertain future after technical issues left two astronauts stuck on the International Space Station.
Thousands of machinists walked off the job shortly after midnight Pacific time Friday, rejecting a labor deal struck between the union’s leaders and Boeing executives. The tentative contract had offered a 25% wage increase over four years. On Friday, Boeing finance chief Brian West said the strike—overwhelmingly approved by the 33,0000
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