Troubled Boeing Signals Potential $25 Billion Funding to Shore Up Finances

Boeing signaled on Tuesday that it could raise up to $25 billion in new stock or debt to shore up its troubled financial position. The company made this announcement in back-to-back regulatory filings, stating that it could raise the funds over the next three years and enter into a new borrowing agreement with lenders.

Boeing has not earned an annual profit since 2018, and has lost over $25 billion since then, following two fatal crashes involving its 737 Max jets, which resulted in the deaths of 346 people. Its finances are facing further pressure due to a strike by workers who build most of its airline jets, which is now entering its second month. The strike is cutting into Boeing’s cash flow, as deliveries of new planes to buyers are halted.

The strike has also drawn the attention of the Biden administration. Julie Su, the acting labor secretary, visited Seattle on Monday to meet with the union and Boeing, according to the International Association of Machinists and Aerospace Workers.

The strike has already resulted in Boeing burning through over $1 billion in cash, leaving the company with $10.3 billion in cash and securities at the end of September.

On Friday, new Boeing CEO Kelly Ortberg announced plans to cut approximately 10% of the company’s workforce – about 17,000 jobs – and delayed the launch of a new model of its large 777 airliner.

Production of current models of the 777 and the 737 Max, Boeing’s best-selling plane, has been halted due to the strike.

The securities filings Boeing made on Tuesday, known as shelf registrations, indicate that the company has the capacity to raise funds without making a firm commitment to doing so.

Boeing also disclosed that it had entered into a $10 billion supplemental credit agreement with major U.S. banks to provide near-term liquidity.

Fitch Ratings stated that these announcements increase Boeing’s financial flexibility and alleviate immediate liquidity concerns. The company’s ability to access capital sources beyond debt will “help alleviate downgrade risks” by improving the prospects for paying off debt that matures in 2025 and 2026, Fitch said.

Standard & Poor’s, however, indicated last week that it was considering cutting Boeing’s credit rating.

Shares of The Boeing Co., based in Arlington, Virginia, rose 2% in afternoon trading on Tuesday.

Key Takeaways:

• Boeing is considering raising up to $25 billion in new funding to address its financial challenges.
• The company’s financial position has been strained by years of losses and a recent strike by its workforce.
• Boeing’s plans to raise funds come as the company faces pressure to address its financial difficulties and regain investor confidence.
• The strike, which has impacted production of the 737 Max and 777 models, continues to create financial pressure.
• The company is seeking to improve its liquidity and financial flexibility through these potential funding measures.