Boeing is considering raising at least $10 billion by selling new stock to replenish its depleted cash reserves, which have been further impacted by an ongoing strike involving 33,000 workers. The company is exploring options with advisors but is unlikely to proceed with the equity raise until the strike is resolved and it has a clearer understanding of the financial toll. Boeing is under pressure to maintain its investment-grade credit rating, as its debt load of $58 billion and ongoing strike, which is costing $1.5 billion per month, are straining its finances.
Boeing has already experienced significant cash outflows due to production delays following a near-catastrophic accident in January, which slowed its 737 Max production. Analysts estimate the company will face a $3.36 billion cash outflow in the third quarter, and without additional capital, its cash reserves could drop to worrying levels by mid-2025. Although Boeing's stock has dropped 42% this year, some analysts believe a capital raise of up to $15 billion is possible, which could help stabilize its financial position and avoid a credit downgrade.
Despite its current financial struggles, Boeing points to a robust order backlog of 5,490 aircraft, valued at half a trillion dollars, with its 737 Max largely sold out until the end of the decade. The company has also implemented cost-saving measures like worker furloughs and executive pay cuts to preserve liquidity. Additionally, Boeing plans to buy back Spirit AeroSystems, a key supplier, for $4.7 billion, further emphasizing the need for additional funds to support these efforts and improve its long-term financial outlook.
