Quick Links
Tim Clark, the President of 
Emirates
, has said that if Boeing is unable to raise more funds, a Chapter 11 bankruptcy, which would enable the company to propose a reorganization plan in court, could be around the corner.
Potential Chapter 11 proceedings
Clark, who spoke with The Air Current about Boeing’s financial hardships, stated that if the aircraft manufacturer cannot raise funds, a rating downgrade could precede Chapter 11 bankruptcy proceedings.
The Emirates executive made his comments shortly after Boeing announced yet another delay to the 777X
, including the flagship model of the aircraft family, the 777-9, on October 11.
The manufacturer said that the 777-9
would enter service in 2026, while the 777-8F should begin flying commercially in 2028. As a result, Boeing expected to recognize a $2.6 billion pre-tax charge on the 777X program, which will be reflected in its Q3 results announcement.
Photo: Boeing
According to Boeing’s Orders & Deliveries data, Emirates has 256 gross orders for the 777X, including its most recent order for 90 aircraft of the type that the two announced at the Dubai Airshow in November.
Then, the airline bought 35 777-8 and 55 777-9 aircraft, adding more 777Xs to its backlog. In total, Boeing has secured 78 777-8
, 55 777-8F, and 407 777-9 orders (gross).
Following cancelations, the 777X backlog is currently split between 43 777-8, 55 777-8F, and 383 777-9s. Ch-aviation data showed that Emirates has 35 777-8 and 170 777-9 aircraft on order, meaning that it holds 42.6% of the total net 777X backlog.
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.
Financial troubles
All three major credit rating agencies, Fitch Ratings, Moody’s, and S&P Global, have issued warnings about Boeing’s credit rating in the light of the recent machinists’ strike.
The most recent update came from S&P Global, which said that it has placed the company on CreditWatch with negative implications on October 8.
“We estimate the company will incur a cash outflow of approximately $10 billion in 2024, due in part to working capital buildup to support manufacturing process overhaul and costs associated with the strike.”
Photo: Randall Erickson | Shutterstock
Fitch Ratings and Moody’s’ rating updates came on September 13, just as Boeing’s machinists, represented by the International Association of Machinists and Aerospace Workers (IAM) District Lodge 751 and District W24, started their labor action on the same day.
The two rating agencies warned that if the strike goes on for a longer period of time, they could downgrade Boeing’s credit rating, meaning that the company’s debt would be rated as junk.
Related
Boeing At Risk Of Becoming US’ Greatest Ever ‘Fallen Angel’ With Junk Status Credit Rating
Two out of three major credit rating agencies said that they were reviewing whether to downgrade Boeing’s rating to junk.
Stalemate continues
The last time that 
Boeing
and the two IAM lodges met was on October 8. Both sides’ statements following that round of negotiations indicated that there had not been any progress on ending the now-month-long strike.
Following the October 8 round of negotiations, Boeing also pulled its contract offer that it presented publicly on September 23, which the machinists did not even vote for.
Tensions between the two sides have continued to rise, with Boeing filing a complaint with the National Labor Relations Board (NLRB), accusing the unions of negotiating in bad faith and presenting a misleading public narrative.
Photo: IAM District Lodge 751
On October 11, shortly after the company filed its complaint, IAM 751 released a statement reiterating that Boeing has continued to negotiate in the press, words that the union had said after the contract offer on September 23.
“Boeing also claimed in their Oct. 8 update that we made ‘non-negotiable demands’ in mediation. The arrogance of Boeing attempting to define what we can or can’t propose is very revealing. Who are they to say what we can propose in bargaining?”
On October 14, IAM 751 said that Julie Su, the Acting Secretary of the Department of Labor (DOL), visited Seattle and met with Boeing and IAM 751 leadership in separate meetings.
Jon Holden, the President of IAM 751, explained the union’s relationship with the company to Su, including its past troubles with Boeing that have an impact on today’s negotiations.
“[Holden] emphasized our members’ sacrifices over the past 16 years to ensure Boeing’s success, which the company should acknowledge going forward.”
IAM 751 did not say whether there were any additional negotiation rounds scheduled on the calendar, possibly indicating that the strike will continue, which will not bode well for the company’s finances.
While Boeing will publish its full Q3 results on October 23, on October 11, the company issued its preliminary quarterly results, saying that its operating cash outflow will be $1.3 billion and that it had cash and investments in marketable securities of $10.5 billion at the end of the three-month period.
Photo: Jonathan Hendry | Simple Flying
It expected to end the quarter with $17.8 billion in revenue, compared to $18.1 billion in Q3 2023 and $16.8 billion in Q2 2024.
Boeing Commercial Airplanes (BCA) should end the quarter with $7.4 billion in revenue and an operating margin of -54%. During the previous quarter, BCA booked $6 billion in revenue and an operating margin of -11.9%.
In Q3 2023, Boeing said that its commercial aircraft division ended the period with $7.8 billion in revenue and an operating margin of -8.6%.
Related
Boeing Reports $16.9 Billion In Revenue For 2nd Quarter With 5,400 Commercial Aircraft Backlog
While the company announced massive losses, Boeing hopes its new CEO and quality and safety improvement plan will turn its fortunes around.
