Boeing is planning to launch a capital hike as early as Monday, according to sources familiar with the matter, in an offering that would help the beleaguered airplane maker boost its liquidity. As per report, the planemaker Boeing was closing in on a plan to raise around $15 billion with common shares and a mandatory convertible bond.
The airlines liquidity boost is needed as it sought to bolster finances worsened by a crippling ongoing Boeing workers strike. The new capital is set to come from a mix of the sale of stock and convertible preferred shares, the source added, saying the total amount raised could rise based on demand.
Boeing workers strike
Last week, the Boeing workers voted nearly two to one to reject Boeing’s latest offer seeking to end the strike that has halted 737 MAX production. The company said earlier this month in regulatory filings that it could raise as much as $25 billion in stock and debt with its investment-grade credit rating at risk.
Boeing to sell equity
The company on Wednesday received clearance from the U.S. Securities and Exchange Commission to sell as much as US$25 billion of equity and debt, a move that could help Boeing avoid having its credit rating downgraded to junk.
Deliberations are ongoing and details of the offering such as timing could still change, the sources said. A Boeing representative declined to comment.
Boeing facing regulatory scrutiny
The aerospace giant has been dealing with increased regulatory scrutiny, production curbs and a loss of confidence from customers since a door panel blew off a 737 MAX plane in midair in early January.
Boeing has been burning through cash all year and last week announced a new $6 billion quarterly loss. Earlier this month, Boeing said it had secured a $10 billion credit agreement with major lenders: Bank of America, Citibank, Goldman Sachs and JPMorgan.
Job cut at Boeing
Boeing said earlier this month it would cut 17,000 jobs and delay first deliveries of its 777X jet by a year. Boeing plans to cut its workforce by about 10%, with reductions potentially including executives, managers and employees, chief executive Kelly Ortberg said in a memo to employees October 11.
Boeing’s new credit agreement
The company said on October 15 that it has a separate new credit agreement in place for US$10 billion, giving it “additional short-term access to liquidity as we navigate through a challenging environment.”
The Arlington, Virginia-based company reported Q3 results on October 23, with revenue of US$17.8B missing expectations and its two largest businesses both reporting widening losses.
Boeing stock
Boeing shares have slumped more than 40% this year. The top three credit rating agencies – S&P, Moody’s and Fitch have said they will cut Boeing’s ratings to junk if it raised new debt without retiring some $11 billion of debt maturing through February 1, 2026.
