Boeing made a $10 billion credit agreement with several banks on Tuesday.
The International Association of Machinists and Aerospace Workers went on strike more than a month ago and is costing the embattled company roughly $1 billion a month. Some 33,000 unionized employees worked at Boeing’s manufacturing factory, which produces its 737 MAX and 767 and 777 planes. Their strike is delaying production and presenting a financial challenge to the company, which is already battling bad press.
In July, Boeing acquired Spirit AeroSystems and assumed its debt. Meanwhile, its customers expecting deliveries of planes via the 777X program will have to wait until 2026 due to the strike. This delay will likely result in a pretax earnings charge of $2.6 billion, according to the company. Another $400 million pretax charge will come as the company shutters its 767 production.
CEO Kelly Ortberg announced he would cut 10% of Boeing’s global workforce, which includes some 17,000 jobs of executives, managers, and employees.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said in a statement. “Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”
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Ortberg replaced Dave Calhoun following allegations of safety violations. Boeing was fresh from the receiving end of an audit from the Federal Aviation Administration in July. The administration found that the company had “failed to comply with manufacturing quality control requirements” in more than one instance.
Boeing’s latest offer to the union included a 30% raise, which was 5% more than its last offer, and a restoration of its performance bonus. However, the employees are seeking a 40% raise, vacation and sick leave accrual, progression, ratification bonus, and a 401(k) match, so the union rejected the offer last week despite Boeing’s promise that it was its “best and final offer.” There are no plans for further negotiations.