Boeing withdraws bid for strikers; S&P Global warns of debt downgrade

Key recommendations

• Boeing withdrew its contract offer to the striking machinists after the union rejected it.

• S&P Global has warned that the strike is adversely affecting the plane maker’s financial position and could reduce Boeing’s debt if it continues.

• The walkout began last month after union members voted to reject the deal the two sides reached.

Boeing (nay) shares fell on Wednesday after the planemaker withdrew its contract offer for its striking machinists and S&P Global put its bond rating on a watch list.

In a memo to employees, Stephanie Pope — who is both Boeing COO and Boeing Commercial Airplanes CEO — wrote that the company’s leadership team “has done everything we can to find common ground with the union.” However, after the third round of negotiations with a federal mediator, “the union did not seriously consider our proposals” and instead made “non-negotiable demands” that the company could not meet.

Because of this, Pope said, “further negotiations do not make sense at this time and our offer has been withdrawn.”

The 33,000 members of the International Association of Machinists and Aeronautical Workers walked off the job last month after general members voted to reject a contract agreement reached days earlier.

S&P Global estimates that Boeing will have a cash outflow of $10 billion this year

S&P Global warned that the strike “increases the financial risk to the company” and estimated that Boeing would have a cash outflow of $10 billion this year. The agency put its ratings on Boeing’s debt on “CreditWatch with negative implications.” S&P explained that it reflects “the increased likelihood of a downgrade if the strike persists towards the end of the year”.

Boeing shares recently fell 2.2 percent to $151.26, trading near a two-year low.

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