Boeing in $35bn cash call amid strikes crisis

Boeing plans to raise up to $25 billion by selling bonds and shares as the struggling aircraft manufacturer faces a cash crunch caused by a continuing strike and production delays.
It has filed a registration statement with the US markets regulator that will allow the company to raise the additional capital over a three-year period.
Boeing also said on Tuesday that it has agreed a $10 billion credit facility with a consortium of banks as it scrambles to shore up its balance sheet and avoid the looming threat of a downgrade into junk territory that would increase its borrowing costs.
Financial pressures have been mounting since regulators demanded Boeing slow down its manufacturing after a door panel blew off one of its 737 Max jets mid-flight in January.
The cashflow squeeze worsened after 33,000 workers walked out at the company’s factories in Seattle last month in a row over pay.
Boeing had cash, or cash equivalents, of $10.89 billion as of June 30. The strike is costing the company about $1 billion a month, according to one estimate released before Boeing announced on Friday that it would cut 17,000 jobs or 10 per cent of its global workforce. The planemaker has also announced that the launch of the 777X jet will be delayed until 2026. Production of its 767 cargo planes will cease in 2027.
Kelly Ortberg, 64, who took over as chief executive of Boeing in August, is in a stand-off with the International Association of Machinists and Aerospace Workers as production grinds to a halt on some lines.
Analysts estimate that Boeing would need to raise between $10 billion and $15 billion to be able to maintain its credit ratings, which are presently one notch above junk.
“These are two prudent steps to support the company’s access to liquidity,” Boeing said in a statement. S&P Global and Fitch, the rating agencies, said on Tuesday that the stock and debt offerings could help preserve Boeing’s investment-grade rating.
Ben Tsocanos, credit analyst at S&P Global, said: “The supplemental credit facility also seems like a sensible precaution.”
However, some analysts were sceptical about the plan, which did not set out exactly how much Boeing plans to raise nor when.
Nick Cunningham, analyst at Agency Partners, a London-based equity research firm, said: “We take the vagueness and breadth of the shelf announcement and the need for the temporary financing as implying that the banks are struggling to sell this issue to potential investors or lenders.”
Boeing has posted operating cash flow losses of more than $7 billion for the first half of 2024 and had about $60 billion in debt.
Last month Brian West, Boeing’s chief financial officer, said at a Morgan Stanley conference that the company was “constantly evaluating our capital structure and liquidity levels to ensure that we could satisfy our debt maturities over the next 18 months while keeping confidence in our credit rating as investment grade”.
Boeing has $11.5 billion of debt maturing through February 1, 2026, and has committed to issuing $4.7 billion of its shares to acquire Spirit AeroSystems, a key supplier, and assume its debt.
Boeing’s shares have fallen by almost 40 per cent since the start of the year. On Tuesday, the shares were up $4.05, or 2.8 per cent, at $153.14 during midday trading in New York.