Boeing is reportedly exploring a plan to raise at least $10 billion through a stock sale as the aerospace giant grapples with financial challenges exacerbated by a strike, ongoing production issues, and a CEO shake-up.
The potential equity raise, first reported by Bloomberg, would help replenish Boeing’s depleted cash reserves.
The company has faced significant financial pressure due to an 18-day strike by 33,000 machinists, production slowdowns, and quality control issues, especially with its 737 Max airliner. The stock sale would not occur until after the strike ends, allowing Boeing to better assess the financial impact of the work stoppage.
Chief Financial Officer Brian West previously stated that Boeing is continually evaluating its liquidity and capital structure to maintain its investment-grade credit rating, which is now at risk of being downgraded to junk status by major rating agencies.
The company has already implemented cost-saving measures, including furloughs, a hiring freeze, and executive pay cuts, in response to its cash flow struggles. Boeing burned through $8.25 billion in free cash during the first half of the year and is projected to face another $3.36 billion outflow in the third quarter. The ongoing strike could cost Boeing around $1.5 billion per month.
As the company weighs its options, investors anticipate that Boeing may proceed with the stock sale, although no final decision has been made. The move would follow a recent trend of public companies raising capital to navigate financial challenges. If approved, this would be one of the largest equity raises since Saudi Arabian Oil Co.’s $12.3 billion stock sale in 2023.
Boeing’s stock has declined by over 40% this year, marking its worst performance since the 2008 financial crisis. Analysts expect the company’s liquidity needs to increase as it seeks to stabilize its supply chain, meet debt obligations, and potentially buy back its troubled supplier, Spirit AeroSystems Inc., which will require further investment.
Bloomberg, Axios, and Market Watch contributed to this report.
