Boeing, the struggling American aircraft manufacturer, has asked investors to inject about $19 billion in order to boost its balance sheet, and to protect its investment grade credit rating from falling to junk status.
After reporting a $6 Billion loss in the third quarter last week, the company announced their plans on Monday.
The manufacturer intends to sell 90,000,000 new shares worth approximately $14 billion, based on current stock prices, and $5 billion in depositary shares which would be converted into preferred shares.
Boeing, with its headquarters in Virginia, refused to elaborate on the stock market filing that suggested any money raised would go towards “general corporate purpose”.
Analysts expect that the new shares are priced close to current market prices. The company announced only two weeks earlier that it was looking to raise $25 billion in funding from investors. Boeing shares fell $4.32 or 2.8% to $150.69 on Monday in New York. This is a drop of over 40% since the beginning of the year.
Boeing, one of the two biggest aeroplane manufacturers in the world, has been facing a number of crises ever since it was forced to ground its 737 Max aircraft following two crashes that occurred in 2018 and 2019. In both incidents 346 passengers and crew were killed.
In January of this year, a door panel broke off in mid-flight. This prompted the regulator to cap production.
industrial action has recently affected Boeing’s west coast commercial plane manufacturing. 33,000 machinists walked out over a dispute about pay and benefits. Boeing is estimated to lose $50 million per day due to the strike that began mid-September. Last Wednesday, the company’s most recent offer was rejected.
Last week, the impact of regulatory controls and the strike on its production was revealed by the company’s finances. It announced a $6.2billion loss for the three-month period ending September. It has spent $10 billion in cash, or half of its total cash stash, so far in 2024. The bosses predict that it will continue burning cash until 2025.
Boeing’s total debt is $58 billion, and the three major credit rating agencies all rate it one notch higher than junk status. S&P Global Ratings warned that the company’s credit rating could fall if cash levels continued to decline.
Kelly Ortberg has been appointed as Boeing’s new chief executive since August. Her task is to restore the company’s reputation. Last week, he called for a “fundamental change in culture” at the company and acknowledged that trust has been lost. Ortberg said that Boeing was “stuck with too much debt”, and that it had made “serious mistakes” in its performance.
Ortberg said to employees, “This ship is big and it will take time to turn around but once it does it can be great again.”
Ortberg, 64 years old, announced in this month’s issue that Boeing will cut 17,000 jobs, a tenth its global workforce, over the next few months.
Boeing has about 4,000 employees in Britain, making it one of its largest markets abroad. The company has 30 UK offices, including its only manufacturing facility in Europe in Sheffield.
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