Who’s flying the plane at Boeing ($BA)? Even with new management, that’s not entirely clear. The aerospace giant has had an unprecedented 2024 — dealing with issues related to its 737 MAX jets, commercial space projects, and stalled labor union negotiations critical to keeping planes rolling off its assembly lines. And now, the company is preparing investors to see the full extent of its mounting problems.

Boeing’s doom loop: One of earnings season’s most-anticipated reports couldn’t wait until Oct. 23. Last Friday, the struggling aviation pioneer pre-announced its quarterly earnings a week early, showing the full impact of its years-long challenges. In the third quarter, Boeing reported a net loss of nearly $6B, including $1.3B in negative operating cash flow and $5B in charges from its troubled and delayed programs. These losses are existentially bad — and new CEO Kelly Ortberg has been forced to respond.

• Boeing announced it would cull 17K jobs — 10% of its workforce — in an effort to “focus our resources on performing and innovating in the areas that are core to what we are,” said Ortberg.
• In addition, the legacy aircraft manufacturer announced that it would delay the already-postponed 777X aircraft rollout from 2025 to 2026 — and end production of its popular 767 cargo plane by 2027.

Down the Debt Drain

As the majority of aircraft production halts, Boeing’s ability to manage its liabilities is a serious concern for investors and debtholders. Since 2018, its debt has ballooned from $12.5B to nearly $60B — a figure that could grow if the company doesn’t manage its resources carefully.

• S&P estimates that Boeing will burn through $10B in cash this year — virtually all of its cash on hand — placing the company on the S&P’s credit rating downgrade watchlist, CreditWatch.
• Along with its planned $4.7B acquisition of Spirit Aerosystems, one-time severance charges, and other costs, the market-sensitive aircraft builder could soon need to take on even more credit.

Forward-looking: If Boeing’s debt is downgraded, it would become the most valuable firm to ever fall into junk status. This would increase the cost of future fundraising and further strain a company already struggling with one of the worst stock performances of the year, withBA

down 42%. These pressures have intensified Boeing’s efforts to resolve its month-long strike and right the ship (or rather, plane).