### Boeing Announces Major Job Cuts Amid Strikes and Financial Struggles

Boeing's stock (BA) dropped by 2% in after-hours trading last Friday as the aerospace giant revealed plans to cut its workforce by 10%, which equates to around 17,000 jobs. The company also plans to postpone the inaugural delivery of its 777X jet until 2026 due to an ongoing strike by its largest union.

“Our business is in a difficult position, and it is hard to overstate the challenges we face together," expressed CEO Kelly Ortberg in a message to employees. He emphasized the necessity of making "tough decisions" and "structural changes" in order to remain competitive and fulfill customer expectations in the long term. The job reductions will affect executives, managers, and general employees. As of December 2023, Boeing's workforce stood at approximately 171,000, according to an SEC filing.

Mike Boyd, president of Boyd Group International, highlighted the gravity of Boeing’s situation in an interview with Yahoo Finance. "We've got an aircraft manufacturer that's in very, very deep trouble. What they did here is not a drill," he remarked following the job cut announcement.

The strike initiated by the International Association of Machinists and Aerospace Workers (IAM) is significantly impairing Boeing's recovery operations. This includes increasing production rates of its highly popular 737 Max jets to 38 per month by the end of the year, up from around 25 per month in June and July. According to S&P Global, the strike could be costing Boeing about $1 billion per month, even after considering various cost-saving measures.

This labor dispute has led S&P Global to place Boeing on CreditWatch Negative earlier this week, hinting at a potential credit downgrade if the strike continues through to the year's end. A riskier credit rating generally complicates and raises the cost of borrowing money for companies. S&P estimates Boeing will experience a cash outflow of about $10 billion in 2024.

Industry analysts predict Boeing may need to conduct an equity offering to raise funds. By the end of the second quarter, Boeing reported total debt of approximately $58 billion, with available cash totaling around $12.6 billion. JPMorgan analyst Seth Seifman and his team noted in a recent statement that an equity raise of over $10 billion is anticipated, likely after the machinists' strike is resolved.

Boeing has adopted a more rigid approach in its dealings with the union after recent negotiation attempts failed. On Thursday, the company filed an unfair labor practice charge against the IAM representatives. Boeing stated that recent mediation results included enhancements to a prior offer, but accused the union of dismissing these proposals and maintaining "unreasonable demands."

Union members went on strike on September 13 following the rejection of a tentative contract. After the third round of negotiations fell through, IAM accused Boeing of refusing to offer wage increases, vacation and sick leave accrual, and the reinstatement of a benefit pension. The union has planned a rally for Tuesday.

Investor confidence continues to wane as Boeing's stock is down approximately 40% year to date.