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Boeing (BA+2.93%) on Tuesday said it would look to raise up to $25 billion by selling stock and debt, and it also entered a new credit agreement for $10 billion as a massive machinist strike continues.
The company said it could issue up to $25 billion in shares or debt over the next year three years, according to a regulatory filing. The new credit agreement comes in addition to an existing $10 billion in prior, untapped credit agreements.
The move comes just days after Boeing said it would lay off about 10% of its workforce, or some 17,000 people, pinning the blame on the strike by the International Association of Machinists and Aerospace Workers. Boeing had previously initiated some furloughs to save cash. In a note to investors, the aerospace firm said its third-quarter results were negatively impacted by the work stoppage, as well as charges in its commercial airplanes and defense segments.
S&P Global Mobility (SPGI-0.05%) last week estimated that Boeing will incur a cash outflow of roughly $10 billion in 2024, partially due to the strike and measures taken to overhaul its manufacturing process. It issued a negative outlook for the company’s credit ratings.
Boeing is expected to burn about $50 million a day in cash because of the strike, according to an estimate released before the layoffs. That would come out to roughly $1.6 billion as of Tuesday, 32 days after the IAM’s 33,000 members walked off the job. As of June 30, the Arlington, Virginia-based company had $10.9 billion in cash.
It’s unclear how long the strike will continue. Boeing last week withdrew its “best and final” proposal — which had included 30% pay raises and other benefits — after the union slammed Boeing’s offer as disrespectful. The union has argued that its workers need a 40% wage hike to combat the cost of living, a return to the pension system it gave up in a 2014 deal, more input into product safety, and other benefits.
“Further negotiations do not make sense at this point,” Boeing Commercial Airplanes head Stephanie Pope said in a note to the employees last week.
Acting U.S. Labor Secretary Julie Su on Monday visited Seattle to meet with both Boeing and the IAM to push both sides to get back to the negotiating table, Reuters reported. The IAM said in a statement that IAM Local 751 President Jon Holden, who represents the striking workers, had updated Su on the state of negotiations and stressed the union’s “commitment to a negotiated contract that values our members’ skills and dedication.”
The IAM will hold a rally in Seattle on Tuesday. Sen. Maria Cantwell and Rep. Pramila Jayapal, both Washington Democrats, are expected to speak alongside local labor officials.