Boeing in turbulence: Strikes, debt and the fight to stay airborne

Turbulence, stall and distress—terms typically reserved for troubled skies—now seem apt for Boeing itself, a company caught in the throes of internal chaos. Like an aircraft striving to hit the “absolute ceiling”—the highest altitude at maximum throttle while maintaining steady flight—Boeing is straining to recover from a series of crises that have clipped its wings. As it grapples with labour strikes, financial strain and mounting competition from Airbus, the aerospace giant finds itself in a desperate climb for stability.

Union rejects Boeing’s offer

Boeing workers have launched a strike after overwhelmingly rejecting a tentative deal between union representatives and the company, which included a proposed 25 per cent pay increase. According to reports, over 30,000 workers involved in the production of planes like the 737 Max and the 777, based in Seattle and Portland, began their strike at midnight Pacific Time (0700 GMT) on Friday. This labour action represents another challenge for Boeing, which has been grappling with financial losses and a tarnished reputation following safety issues, including two fatal crashes in recent years.

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As per union sources, almost 95 per cent of the International Association of Machinists and Aerospace Workers (IAM) members who participated in the ballot rejected Boeing’s offer, with 96 per cent supporting strike action. Boeing acknowledged the overwhelming rejection of the agreement in a statement, noting that the tentative deal was “not acceptable to the members.” The company reiterated its commitment to improving relations with the union and signalled its willingness to return to negotiations.

Stakes for Boeing’s new leadership

This strike also represents a significant blow to Boeing’s new CEO, Kelly Ortberg, who took office only a month ago with a mandate to turn the company around. According to reports from FlightGlobal, Ortberg had warned employees ahead of the vote that the strike could endanger Boeing’s recovery, given its financial troubles and the critical nature of ongoing aircraft production. The last strike by Boeing workers in 2008 had resulted in an eight-week-long walkout, costing the company approximately $1.5 billion per month, as reported by Moody’s.

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Boeing’s struggles in the wake of crises

Boeing’s reputation and financial stability have been in a state of decline for several years. In July, the company agreed to plead guilty to fraud charges and pay a fine of nearly $244 million related to the two fatal crashes of its 737 Max planes, which occurred more than five years ago. CNN also reported that Boeing has been contending with other legal challenges, including a mid-air blowout of a door plug on an Alaska Airlines plane in January 2024. Consequently, the company has had to slow down production due to caps imposed by the Federal Aviation Administration.

Boeing has accumulated substantial financial losses, with CNN noting that it has lost $32 billion over the past five years. Despite having a backlog of 5,600 commercial jet orders worth $529 billion, the company has struggled to ramp up production sufficiently to turn a profit. According to AeroDynamic Advisory’s managing director, Richard Aboulafia, Boeing’s position within the industry gives it “the luxury of time”, but that window of opportunity is closing.

KLM’s shift away from Boeing

In another blow to Boeing, Dutch airline KLM recently announced its decision to replace its aging Boeing 737 fleet with Airbus A321neo planes. According to NU.nl, KLM’s decision was driven by the company’s “cleaner, quieter, more economical” programme. The airline’s spokesperson explained that the noise reduction benefits and environmental advantages of the A321neos played a key role in the decision. While the switch to Airbus is significant, the airline clarified that this move was unrelated to its parent company, Air France-KLM.

The transition to Airbus also highlights the competition Boeing faces from its main rival in the commercial aircraft industry. CNN reported that Boeing has fallen behind Airbus in orders and deliveries for new jets further compounding its struggles in the market.

Mounting debt

Boeing’s financial difficulties have resulted in its debt rising from $13 billion at the end of 2018 to $48 billion in 2024, according to data from FactSet. Moody’s has warned that the company may have to issue new debt to cover significant amounts maturing in 2025 and 2026. This looming financial burden could further exacerbate the company’s already precarious position in the market.

Despite the financial woes, Boeing’s management has remained optimistic. CEO Dave Calhoun told investors that the demand for Boeing’s products remains strong and assured stakeholders that the company’s future is promising. However, experts like Aboulafia believe that Boeing needs to implement serious changes to recover with some suggesting a change in leadership as a first step.

A unique position in a challenging market

Boeing’s unique position as one of only two manufacturers of large commercial jets has, so far, allowed it to avoid bankruptcy despite its significant losses. As noted by CNN, even if all of Boeing’s customers shifted their orders to Airbus, the enormous backlog at Airbus means it would take years for the competitor to fulfill those orders. This has given Boeing some breathing room, but it also raises questions about how long Boeing can continue to rely on these advantages without addressing its internal issues.

Airline CEOs, such as Alaska Airlines’ Ben Minicucci, cited the high costs associated with maintaining fleets from both manufacturers, which makes it difficult for airlines to switch from Boeing to Airbus entirely. Minicucci explained that the decision to maintain a single-fleet Boeing operation was financially driven, saving Alaska Airlines $75-100 million annually in training and maintenance costs.

Future of Boeing

With Calhoun set to retire by the end of the year, Boeing’s leadership transition is akin to the pivotal moments of an underdog fighter gearing up for their final round in the ring. Bill Conti’s Gonna Fly Now echoes the necessity of overcoming adversity, but Boeing is not just battling a fierce competitor in Airbus—it’s up against its own history of missteps. As financial strain mounts, some analysts, like Ron Epstein of Bank of America, have drawn parallels between Boeing’s potential trajectory and General Motors’ decline.

Yet, in this moment of turbulence, Boeing also embodies Ozzy Osbourne’s anthem Flying High Again. The company needs to shift into overdrive, recalibrating not just its aircraft but its very ethos, before it loses altitude irreparably. As it contemplates its next steps, the lyrics “Got a crazy feeling I don’t understand” seem to capture the uncertainty of this moment—Boeing’s last chance to fix things to keep the company airborne and cruising or nosedive into history.