US-based aviation giant Boeing has struggled to recover from the crashes and scandals surrounding its 737 Max 9 aircraft. Economic problems, the layoffs of tens of thousands of employees, and strike processes have pushed one of the largest aviation companies in history to the brink of collapse. Recent reports suggest the company is on the verge of falling into a serious debt trap.
Boeing borrowing tens of billions of dollars!
The company’s production delays and quality issues have been exacerbated by disputes with union members. In recent talks with the IAM union, Boeing’s offer of a 25% pay raise over four years was almost unanimously rejected by workers. Even after increasing the offer to 30%, union representatives did not accept the proposal.
However, despite all these challenges, Boeing’s position in the market is helping the company stay afloat. Alongside Airbus, Boeing is one of only two companies globally producing full-sized passenger aircraft needed by the aviation industry. Both manufacturers have years-long order backlogs, and Airbus does not have the capacity to handle canceled orders from Boeing.
According to recent information, the company has been forced to continuously borrow from a consortium of banks due to the ongoing crises. Boeing’s growing debt load and cash flow problems are causing concern among financial circles.
Especially due to production halts and delivery delays, the company’s revenue streams have been significantly impacted. With a large portion of airplane sales revenue received upon delivery, Boeing’s path out of its debt spiral has become even more difficult.
Industry experts note that while Boeing has lost market share to Airbus, the duopoly structure of the aviation sector makes its complete collapse unlikely.
Still, to reduce its debt load, restore its reputation, and rebuild trust, Boeing will need to tighten its quality control processes and improve its relationships with employees. How the company will overcome these financial challenges in the coming period remains a question of great interest…
