Key Points
- Boeing plans to raise around $15 billion, primarily through common stock and mandatory convertible preferred shares, to improve its financial stability amid ongoing challenges.
- A machinist strike, which has rejected Boeing’s latest offer and hhalted737 MAX production, has significantly strained the company’s operations and finances.
- Rating agencies have warned of a potential downgrade to junk status if Boeing raises new debt without addressing its $11 billion due through 2026.
- Regulatory scrutiny intensified after a door panel detached from a 737 MAX mid-flight, adding pressure on Boeing’s reputation and operations.
According to a source familiar with the matter, Boeing is expected to launch a substantial $15 billion capital-raising initiative as early as Monday. The capital increase will reportedly come from a mix of common stock sales and mandatory convertible preferred shares. This move aims to strengthen Boeing’s finances, which have been under significant strain due to an ongoing machinist strike and escalating production challenges.
The source noted that the amount raised through the planned stock and convertible preferred shares sale could exceed $15 billion, depending on investor demand. The company, however, has yet to release a public statement. Bloomberg News first reported on the anticipated timing of this capital-raising effort, which comes as Boeing navigates multiple operational and financial pressures.
A major factor in Boeing’s financial challenges has been the unresolved machinist strike. Last week, union machinists voted nearly two-to-one against Boeing’s latest offer, prolonging a strike that has already disrupted production of the 737 MAX. This strike and additional regulatory and production-related obstacles have led to continued cash flow difficulties for Boeing, which reported a $6 billion quarterly loss last week.
The company has faced increased regulatory scrutiny after a door panel detached from a 737 MAX aircraft mid-flight in January, sparking concerns over the model’s safety. Production delays and setbacks related to its flagship 777X jet have further complicated Boeing’s situation. Earlier this month, Boeing delayed the delivery of the first 777X by a year and announced plans to cut around 17,000 jobs, approximately 10% of its global workforce.
Boeing’s credit rating also hangs in the balance. While the company has secured a $10 billion credit agreement with Bank of America, Citibank, Goldman Sachs, and JPMorgan, the top three credit rating agencies—S&P, Moody’s, and Fitch—have warned that Boeing’s rating could fall to junk status if it takes on new debt without addressing its existing $11 billion debt load, set to mature by early 2026.
In the face of mounting pressures, Boeing had previously stated in regulatory filings that it could raise $25 billion in stock and debt, depending on market conditions. The outcome of this $15 billion capital raise will be critical as Boeing works to stabilize its finances and navigate a difficult period marked by labor unrest, regulatory issues, and production challenges.
