Boeing is advancing a plan to raise approximately $15 billion through a combination of common stock and mandatory convertible bonds, as the company seeks to bolster its finances amid significant operational challenges, according to sources familiar with the situation, Reuters reports.
The aerospace manufacturer is also exploring a structured finance transaction that could generate an additional $5 billion.
The funding initiative comes as Boeing faces heightened regulatory scrutiny, production limitations, and declining customer confidence, particularly following an incident in January when a door panel detached from a 737 MAX aircraft mid-flight. In a regulatory filing earlier this week, Boeing stated that it could potentially raise up to $25 billion in stock and debt, but concerns persist that the $15 billion targeted may not be sufficient to resolve its ongoing issues.
As part of its financing efforts, Boeing secured a $10 billion credit agreement with major lenders, including Bank of America, Citibank, Goldman Sachs, and JPMorgan. These lenders have been assessing investor interest in a combined offering that includes both new shares and the hybrid mandatory convertible bond, which can convert into equity at a predetermined date.
The plan reportedly includes issuing around $10 billion in new shares and nearly $5 billion in mandatory convertible bonds. While some sources indicated that the offering might be priced shortly after Boeing’s third-quarter earnings report on October 23, others suggested the company is hesitant to move forward during the ongoing labor strike, which is estimated to be costing Boeing tens of millions of dollars per day.
Michael Barr, a senior research analyst at Neuberger Berman, noted that while Boeing’s free cash burn in the third quarter was less severe than expected, the company may need to act quickly to maintain its investment-grade credit rating. Boeing shares have seen a slight increase since the funding announcement, indicating some investor optimism.
Boeing is considering a three-year mandatory convertible bond that would offer a 7% to 8% annual coupon and could convert into shares at a 20% premium over the current stock price. This approach is viewed as more favorable to existing shareholders, as the stock conversion would occur after a couple of years and at a premium, thus minimizing immediate dilution.
Raising equity capital is essential for Boeing as it aims to safeguard its investment-grade ratings. The top credit rating agencies—S&P, Moody’s, and Fitch—have signaled that they may downgrade Boeing’s ratings to junk status if the company issues new debt without addressing approximately $11 billion in debt maturing by February 1, 2026.
