Boeing is planning to raise as much as $25 billion through the sale of bonds and shares. The aircraft manufacturer, which faces a cash crisis due to a strike that continues and production delays, has been struggling to meet its obligations.
The company has filed an application with the US regulator of markets that will allow it to raise additional capital over three years.
Boeing said Tuesday it had agreed to a $10 billion credit line with a group of banks, as it tries to strengthen its balance sheet in order avoid a possible downgrade that could increase its borrowing costs.
Since January, when a door panel on a Boeing 737 Max jet blew off in mid-flight after a regulator demanded Boeing to slow down production, financial pressures have increased.
Cash flow problems worsened when 33,000 employees left the company’s factories last month over a dispute about pay.
Boeing’s cash or cash equivalents was $10.89 billion at the end of June. Boeing is losing $1 billion per month due to the strike, according an estimate made before Boeing announced Friday that they would reduce 17,000 jobs, or 10% of their global workforce. Boeing has also announced the delay of the launch date for the 777X jet until 2026. The production of 767 cargo aircraft will cease in 2027.
Kelly Ortberg (64), who assumed the role of chief executive of Boeing at the end of August, is currently in a dispute with the International Association of Machinists and Aerospace Workers, as some production lines grind to a stop.
Analysts estimate Boeing would have to raise between $10 and $15 billion in order to maintain its current credit rating, which is one notch higher than junk.
Boeing stated in a press release that these were two prudent measures to help the company access liquidity. The rating agencies S&P Global and Fitch said Tuesday that stock and debt offerings may help Boeing maintain its investment-grade rating.
Ben Tsocanos is a credit analyst with S&P Global. He said, “The supplemental facility also appears to be a sensible measure.”
Some analysts were skeptical about the plan because it did not specify how much Boeing planned to raise or when.
Nick Cunningham of Agency Partners, an equity research firm based in London, stated: “We interpret the vagueness and broadness of the shelf announcement, and the need for temporary financing, as implying the banks’ struggle to sell this issue.
Boeing had a debt of about $60 billion and incurred operating losses of over $7 billion during the first half 2024.
Boeing’s Chief Financial Officer, Brian West, stated at a Morgan Stanley Conference last month that the company “constantly evaluates our capital structure and our liquidity levels to ensure we can satisfy our debt maturity dates over the next 18-months while maintaining confidence in our investment grade credit rating”.
Boeing’s debt is $11.5 billion and will mature on February 1, 2026. Boeing has agreed to issue $4.7 billion in shares to purchase Spirit AeroSystems and to assume its debt.
Boeing shares have dropped by nearly 40% since the beginning of the year. The shares in New York closed Tuesday up $3.32 or 2.2% at $152.35.
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