Boeing drops 1% after announcing plans to cut costs, including hiring freeze

Boeing shares fell on Monday morning after the company announced plans to cut costs, including a hiring freeze and a pause on nonessential staff travel, in an effort to preserve cash as it deals with a factory worker strike who rejected a tentative labor deal and went on strike on Friday. Boeing CFO Brian West said in a note to staff on Monday that “We are working in good faith to reach a new contract agreement that reflects their feedback and enables operations to resume. However, our business is in a difficult period. This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.” Meanwhile, The Financial Times’ Sujeet Indap believes that Boeing is heading toward a “mega” equity raise, and that it will choose to sell equity as the way to shore up liquidity to avoid credit market chaos. Indap writes that a $10B offering, what Boeing’s cash burn rate and balance sheet preferences suggest would be a credible size, would imply selling a little more than a tenth of the company, a size not often seen in capital markets. Boeing shares are down 1% to $154.92 in morning trading.