Boeing's crisis continues to grow. Now it's taking on billions of dollars in debt for the CNN business

Cash-starved Boeing, reeling from massive financial losses from a crippling strike and years of operational and safety problems, is turning to major banks and Wall Street to raise tens of billions of dollars in cash.

In a regulatory filing early Tuesday, the company announced plans to borrow $10 billion from a consortium of banks. It announced plans to raise $25 billion by selling stock and debt separately. The $10 billion in debt plans will be included in the $25 billion that Boeing has filed for bankruptcy.

The company's debt has risen over the past six years as Boeing reported core operating losses of more than $33 billion. A month-long strike by 33,000 members of the International Association of Machinists nearly halted production of its commercial aircraft.

Talks between Boeing and IAM broke down last week, with no new talks planned. On Friday, Boeing's new CEO Kelly Ortberg announced plans to cut 10% of its 171,000 workers worldwide.

Boeing's credit rating has plunged to the lowest investment-grade level — just above “junk bond” status — and major credit rating agencies have warned that Boeing is at risk of being downgraded to junk. This will increase his borrowing costs. Boeing's long-term debt hit $53 billion at the end of June, up from $10.7 billion at the end of March 2019, when the second fatal crash of the 737 Max grounded the plane for 20 months, the company's best-selling aircraft.

Over the past six years, Boeing has been plagued by a series of problems, ranging from embarrassing to tragic. Two 737 Max crashes killed 346 people, a tragedy for which the company agreed to plead guilty to defrauding the Federal Aviation Administration during the certification process for the planes. A federal judge is considering whether to accept his plea deal that would include a $487 million fine and require him to serve under the supervision of a court-appointed monitor. Attorneys for the families of the crash victims argued in court that the punishment was not severe enough.

Whistleblowers testified before Congress that Boeing's manufacturing process violated the company's own rules and put profits ahead of safety and quality. This was driven home in January when a door plug flew off the side of a 737 Max flown by Alaska Airlines, leaving a gaping hole in the plane shortly after takeoff. Although none of the crew members or passengers were seriously injured, the incident prompted numerous federal investigations, one of which found that the plane had left a Boeing factory without the four bolts needed to hold the door plugs in place.

The IAM strike is just the latest blow. Last month, the company and union leadership agreed to a tentative deal that would give union members a 25% raise over the four-year life of the contract, only to have the rank-and-file vote almost unanimously to reject the deal and go on strike. Boeing's proposal for a 30% increase over the duration of the contract was also rejected by union negotiators.

Despite all its problems, Boeing is able to borrow money from a consortium of banks and will probably be able to sell the stock and debt issues it needs on Wall Street because of the unique market position it commands. Boeing and European rival Airbus are essentially the only companies that make the full-size jets needed by the global airline industry. Its place as part of a duopoly essentially ensures its survival.

Both have backlogs of orders stretching years into the future. And Airbus doesn't have the ability to take orders from Boeing. If an airline cancels its order for Boeing jets and places an order with Airbus instead, it would have to wait five years for those planes to begin deliveries. And another competitor trying to enter the market would take years to get its own aircraft approved. So while Boeing has lost market share to Airbus in recent years, it's not going anywhere.

But the strike halting production of its 737 Max, as well as its 767 and 777 freighters, will create more cash flow problems for Boeing in the near term, as it gets most of its money from the sale of an airplane. during delivery. Additionally, the company announced Friday that its already long-delayed 777X, the next generation of that widebody passenger jet, will be further delayed due to problems discovered during test flights. It is now not due to start delivering until 2026.

This story has been updated with additional reporting and context.