Bankruptcy For Boeing? Some Striking Workers Believe It Could Happen

While there are widespread reports that Boeing
could be facing a potential credit downgrade, some existing Boeing staff are suggesting the American plane maker could file for bankruptcy. Economic experts have weighed in on the matter, noting that every day that staff are striking, the manufacturer is losing millions of dollars, surpassing a billion in a month, but it remains unclear if Chapter 11 would be on the cards.

One month into the Boeing Machinists Strike

Following what appears to be both sides putting their feet down, this week, the Boeing Machinists, represented by the International Association of Machinists District 751, had negotiation talks break down with Boeing, with many continuing to picket in and around the Seattle area.

Boeing 737 MAX aircraft in Renton before deliveries shutterstock_1518781016

Photo: Thiago B Trevisan | Shutterstock

A recent announcement from S&P Global suggests that Beoing could have its credit rating downgraded. The company noted that the manufacturer has seen its cash balance dwindle amid the strike, with the company expected to be putting more on the line than the workers themselves. This would top off what has already been an extremely challenging year for the American plane maker.

Related

Breaking: Boeing Announces Delay Of 777X Program Timeline Until 2026

President and CEO Kelly Ortberg clearly showed that change is afoot at the American plane maker.

Playing hardball is taking its toll on Boeing’s finances

Economists have outlined that Boeing is facing financial troubles for several reasons, including the knock-on effect from industry-wide engine issues, the door plug dilemma with Alaska Airlines
, and multiple supply chain constraints. However, the recent machinist’s strike, which has seen many staff walk off the job, has seen Boeing play hardball in negotiations, and this appears to be having a ricochet effect on the manufacturer’s bottom line.

According to the professor of economics at the University of Portland, Dr. Bahram Adrangi estimates Boeing could be losing more than a billion dollars per month as the strike continues, compounding against the $30 billion already lost since 2019.

Boeing 787 factory

Photo: Lukas Souza | Simple Flying

If Boeing’s credit is downgraded, it will simply cost more money for the manufacturer to dig itself out of this fiscal hole. Borrowing for capital to get back up and running will be lent at a rate of 8-9% versus 5% being paid now. This accumulates to a large number over time.

No chance of going bankrupt

While the watercooler chat is swirling, with many staff believing that the manufacturer could go bankrupt, many economists have shared their predictions, explaining that this is unlikely. Boeing’s threat of distress currently sits under 35% at present, and while there is widespread evidence that the manufacturer is in financial trouble, the financial torment over the next two years will be taken into consideration, and how adjustments will be required to improve Boeing’s overall balance sheet.

Boeing B777X

Photo: Coby Wayne | Shutterstock

In Breaking News, reported by Simple Flying, Boeing announced today that while the plane manufacturer is facing challenging headwinds, structural changes will be required to ensure its ability to remain competitive. This update also included news that the delivery of the 777X will now not be until 2026.

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