Boeing Seeks Funding Amid Strike Disruptions and Financial Strain

Boeing

Boeing, the aerospace manufacturing giant, is taking urgent measures to raise capital in response to significant financial strain caused by a multiweek work stoppage and declining production. In a bid to increase liquidity, the company has launched dual equity offerings that could generate up to $22 billion, helping to stabilize its finances amidst the ongoing strike and production slowdowns.

The Virginia-based aerospace manufacturer is offering 90 million shares of common stock, valued at approximately $13.95 billion, based on Boeing's most recent closing price. Additionally, Boeing is offering $5 billion worth of depositary shares, with overallotment options that could raise another $750 million. This move is part of a broader effort to bolster Boeing’s financial standing as it faces severe disruptions in its operations.

Impact of the Ongoing Strike and Financial Challenges

Boeing is grappling with the consequences of a massive strike that began on September 13, when over 32,000 of its employees, represented by the International Association of Machinists and Aerospace Workers (IAMAW), walked off the job. The strike, which has lasted over five weeks, has resulted in a halt in production for all of Boeing's commercial aircraft programs, with the exception of the 787 Dreamliner.

The strike has already cost the company an estimated $4.5 billion, according to Anderson Economic Group. Boeing’s most recent financial results for the July-September period showed a loss of $6.2 billion, and the company has warned of further challenges ahead, with executives anticipating a significant cash burn in 2025.

The situation has put Boeing’s investment-grade credit rating at risk, as concerns grow over the company's financial stability. The company is currently carrying approximately $12 billion in debt, which must be repaid by the end of 2026, according to Moody's.

Strategic Plans for Recovery and Liquidity

Boeing intends to use the proceeds from these equity offerings for general corporate purposes, which may include paying down its significant debt or making strategic investments in its subsidiaries. The company is also in the process of reacquiring its shipset supplier, Spirit Aerosystems, in a deal that will further add to its debt load.

In addition to the equity offerings, Boeing had previously announced plans to raise $35 billion through a combination of stock and debt offerings. The company also entered into a $10 billion credit agreement with major banks to help stabilize its finances. However, it remains unclear whether the current offerings are part of that larger funding strategy or if they represent a separate initiative.