Home

       
                       .-') _      .-') _  
                      ( OO ) )    ( OO ) ) 
          .-----. ,--./ ,--,' ,--./ ,--,'
         '  .--./ |   \ |  |\ |   \ |  |\  
         |  |('-. |    \|  | )|    \|  | ) 
        /_) |OO  )|  .     |/ |  .     |/  
        ||  |`-'| |  |\    |  |  |\    |   
       (_'  '--'\ |  | \   |  |  | \   |
          `-----' `--'  `--'  `--'  `--'
       lite.cnn.com - on gopher - inofficial
       
       
       ARTICLE VIEW: 
       
       What Boeing’s massive financial crisis means for you
       
       By Chris Isidore, CNN
       
       Updated: 
       
       6:00 AM EDT, Wed October 16, 2024
       
       Source: CNN
       
       Boeing’s finances are a multi-billion-dollar problem for the company,
       its employees, suppliers and airline customers. The good news is that
       they probably won’t affect the average American – well, not very
       much.
       
       After 33,000 members of the International Association of Machinists
       went on strike against the company a month ago, Boeing won’t be able
       to deliver all of its planes as promised. That will hurt airlines and
       could have a modest impact on the number of seats available, especially
       on domestic flights around the United States.
       
       Fewer seats could mean airlines will be forced to raise fares. But,
       currently, fares are falling because there is more capacity in the
       industry than there is demand to fly. Many of the planes not being
       delivered were likely due to replace older, less efficient planes.
       
       So the strike won’t limit your ability to fly. The planes owned by
       airlines are already sold. Just like when the automakers were on strike
       last year, no one took your Chevy away from you, Boeing planes that are
       currently in service will remain in service.
       
       But Boeing’s financial problems, which started long before the strike
       could hurt the broader US economy.
       
       Boeing’s cash crunch
       
       Boeing has been hemorrhaging money for more than five years, ever since
       two fatal crashes of the 737 Max in late 2018 and early 2019 killed 346
       people and led to a 20-month grounding of the company’s best-selling
       plane.
       
       Since that time, Boeing has reported more than $33 billion in core
       operating losses, and there is no end in sight to the red ink. The
       strike that started September 13 is adding $1 billion in losses every
       month to the company’s bottom line, according to credit rating agency
       Standard & Poor’s. The problem is the halt of production of the 737
       Max has cut off the most important source of funds for the company that
       gets most of its cash from aircraft sales at the time planes are
       delivered.
       
       Boeing is looking to raise up to $25 billion to help it weather the
       current storm through additional borrowing along with the sale of stock
       and debt. It is also planning to cut 10% of staff worldwide, or about
       17,000 of 171,000 employees, in a cost-cutting move. Those employees
       will be hurt by the layoffs, as will the 33,000 strikers who will be
       getting a fraction of their normal salary in the form of strike
       benefits from the union.
       
       Hit to the economy
       
       Boeing’s financial problems are bad news for the US economy. It is
       the nation’s largest exporter. And more immediately, business in
       communities where laid-off Boeing employees and strikers live, mostly
       in Washington state, could see problems as those people pull back on
       spending. But the other way that the financial problems would spread
       beyond Boeing will be the impact of the strike on suppliers. Boeing has
       10,000 suppliers, which can be found in all 50 US states. It estimates
       its own annual contribution to America’s economy at $79 billion,
       supporting 1.6 million jobs directly and indirectly.
       
       According to analysis by Anderson Economic Group, losses by Boeing
       employees, strikers, suppliers and the company itself, along with local
       governments, have already reached $5 billion in the first month of the
       strike.
       
       Boeing’s credit rating is at risk of being downgraded to junk bond
       status, which would create more financial problems by raising its cost
       of borrowing. Junk bond status means there’s an increased risk of
       default and perhaps bankruptcy. But even if it is forced to file for
       bankruptcy, that doesn’t mean it will go out of business. It just
       means Boeing would use the bankruptcy process to shed some of its
       unaffordable debt and other obligations. Numerous successful companies,
       including General Motors and most of the nation’s airlines, have gone
       through bankruptcy and gone on to report record profits afterwards.
       
       And it is not likely that Boeing would be forced out of business by its
       current financial crisis. Boeing and European rival Airbus are
       essentially the only companies that make the full-size jets that the
       global airline industry needs. Its place as part of a duopoly
       essentially .
       
   DIR  <- back to index