Boeing Co. plans a significant capital raise to boost liquidity, targeting over $15 billion through a combination of shares and convertible debt.
Following recent financial setbacks, the Arlington-based company aims to stabilize its investment-grade rating and manage the financial demands caused by a prolonged strike, contract rejections, and a struggling manufacturing process.
The transaction, potentially starting October 28, received US Securities and Exchange Commission clearance on October 23 for up to $25 billion in equity and debt sales, offering Boeing additional options if demand increases.
Boeing’s financial challenges have escalated, prompting it to seek $15 billion in new funding.
The planned raise, one of the largest since SoftBank’s T-Mobile sale in 2020, could increase further based on market demand.
The company will utilize this capital to maintain operations, fund factory restarts, and preserve its investment-grade credit rating, which faces potential downgrades due to ongoing cash burn.
The capital infusion will involve equity and debt convertible to shares, providing Boeing the flexibility to adjust depending on investor interest.
Boeing has mobilized its advisers to secure investors, with deliberations ongoing on the precise timing and structure.
As the aerospace giant navigates financial pressure, the move aims to sustain critical operations and investor confidence.
The US Securities and Exchange Commission granted Boeing clearance for up to $25 billion in equity and debt issuance.
This approval gives Boeing leeway to expand its fundraising if necessary.
Bank of America analysts forecasted a potential capital raise between $18 billion and $20 billion, adding strategic flexibility as Boeing manages escalating costs.
Boeing anticipates a cash outflow of $4 billion for the fourth quarter, culminating in approximately $14 billion in free-cash depletion for the year.
Continued cash burn is expected through the first half of 2025 as Boeing ramps up production of its 737 Max jetliner.
The infusion of funds will mitigate immediate financial pressures while sustaining factory operations and supplier payments.
Workforce reductions and contract setbacks
Financial difficulties have driven Boeing to implement workforce cuts, targeting a 10% reduction.
Recent strikes and contract rejections, including workers’ dismissal of a 35% wage increase offer, have compounded the company’s operational hurdles.
CEO Kelly Ortberg has indicated potential executive and managerial layoffs as Boeing seeks to reduce expenses and streamline costs.
CEO Ortberg is conducting a comprehensive portfolio review to optimize Boeing’s resources and stabilize its business.
This includes re-evaluating the Starliner space capsule program and other underperforming assets. A final decision on streamlining measures is anticipated by year-end, part of broader efforts to reduce long-term liabilities.
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