Boeing announced plans to raise up to $25 billion through shares or debt over the next three years to boost its liquidity amidst ongoing challenges. The company is grappling with a prolonged machinist strike and issues across its aircraft programs, contributing to a nearly 42% drop in its shares this year. A universal shelf registration will give Boeing the flexibility to explore various capital options, vital for stabilizing its balance sheet. Bank of America analysts predict Boeing might raise $10 billion to $15 billion through equity, which could help strengthen its financial standing and mitigate the risk of a credit downgrade. Fitch Ratings acknowledged that this move should ease immediate liquidity concerns.
S&P Global Ratings recently highlighted the financial strain caused by the machinist strike, estimating losses exceeding $1 billion monthly. In response, U.S. lawmakers from Washington state urged Boeing’s leadership and union representatives to resolve their differences promptly. Meanwhile, Boeing secured a $10 billion credit facility to support short-term liquidity needs.
In light of financial struggles, including $5 billion in charges within its defense and commercial units, Boeing’s new CEO, Kelly Ortberg, announced plans to lay off about 17,000 employees, or 10% of the global workforce, to cut costs and refocus efforts on core areas. Ortberg is set to address these issues in his first quarterly investor call on October 23.
As Boeing navigates a challenging period, this strategic financial maneuvering aims to shore up its balance sheet and pave the way for recovery, while stakeholders remain watchful of the company’s next steps.
Original Story https://www.cnbc.com/2024/10/15/boeing-equity-debt-raise.html
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