Boeing Eyes Asset Sales to Raise Cash Amid Financial Struggles

Media reports on Sunday, citing sources familiar with the matter, stated that American aviation giant Boeing Co. (BA.US) is deciding whether to sell some of the company's underperforming business units and other corporate assets to accelerate cash generation. The company is seeking to overcome the operational crisis caused by a sudden drop in production capacity and ongoing strikes by employees, and is doing everything possible to prevent the company's cash flow from completely drying up.

Last week, the company's board of directors held a meeting at the company's headquarters in Arlington, Virginia, where they questioned the heads of Boeing's various departments and carefully reviewed the situation reports from each department.

However, according to media reports, Boeing CEO Kelly Ortberg did not participate in the discussion. He was appointed as Boeing's CEO in early August and is responsible for improving the company's business operations. He is continuously involved in negotiations between the company and the leaders of its largest unions, striving to bring an end to the strikes.

On Saturday, a proposed agreement reached between Boeing's management and union organizations would give Boeing's mechanics a raise of about 35% over four years.

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Boeing said in a statement, "We look forward to our employees voting on the post-negotiation proposal." However, it is not guaranteed that they will agree to the proposal, especially after workers overwhelmingly rejected the initial proposal. The union told workers on Saturday, "The future of this contract is in your hands."

The vote to approve the agreement and allow union employees to return to work could still put Boeing in a very difficult financial situation. According to media reports, industry insiders and analysts speculate that Boeing may need to file for bankruptcy or split into more independent companies to promote Boeing's self-rescue process.

Ortberg is striving to take multiple measures to raise at least $10 billion in cash and promote a layoff of about 10% of Boeing's workforce to minimize losses. These prolonged strike losses have exacerbated the manufacturing business difficulties faced by Boeing and disrupted Boeing's vast supply chain.

The company has been working hard to accelerate the divestment from its rocket manufacturing joint venture with American defense contractor Lockheed Martin (LMT). Boeing is also responsible for overseeing some troubled large-scale projects, such as the U.S. military's refueling aircraft and the replacement for Air Force One.

According to media reports citing sources familiar with the matter, the company sold a small defense subsidiary that produces surveillance equipment for the U.S. military last week.

Ortberg will make his first public comments as CEO on Wednesday, when the union will vote on the new contract and Boeing will disclose its financial performance for the third quarter. The company has warned that it may incur billions of dollars in expenses and a net loss of up to $6 billion in the three months ending September 28.Amid a significant increase in global air travel demand, Boeing is striving to continue delivering finished aircraft to customers, making the return of more workers to their jobs a key step in generating operating cash flows. As of the end of September, the company had a backlog of as many as 6,197 commercial aircraft orders yet to be delivered.

Since the COVID-19 pandemic, Boeing has been selectively hiring workers in an effort to prepare for higher production rates, a goal that has not yet been achieved. This is due to the U.S. aviation regulatory authorities imposing restrictions on the company's output following a door seal explosion on a Boeing jet operated by Alaska Airlines in January, with many of its production standards being much stricter than usual.

In the wake of the Alaska Airlines Boeing 737 MAX 9 door seal explosion, which led to a sharp decrease in Boeing's aircraft production capacity due to regulatory pressure, and a series of negative events such as the recent continuous major strikes by Boeing employees, the company faces severe operational challenges.

With approximately 33,000 employees on strike for over a month, significantly disrupting Boeing's production planning and nearly depleting its cash reserves, Boeing recently announced a plan to lay off up to 17,000 workers and incur costs of up to $5 billion. This indicates that the turmoil within Boeing over the past year continues unabated. Just a few days after this plan was announced, U.S. Acting Labor Secretary Julie Su chose to travel to Seattle to personally intervene in Boeing's employee unrest for the first time.