Boeing Announces $22 Billion Stock Offering Amid Financial Strain

Boeing has initiated a significant stock offering aimed at raising up to $22 billion to bolster its finances amid mounting financial pressures. This offering, announced today, includes 90 million shares of common stock and an additional $5 billion in mandatory convertible securities, marking one of the company’s largest capital-raising efforts to date. 

Financial Struggles and Production Challenges 

The company’s financial situation has become increasingly dire, largely due to an ongoing strike that began in September involving 33,000 machinist union workers. This strike has halted production of Boeing's highly profitable 737 MAX model along with other aircraft, compounding the challenges the aerospace giant faces. Boeing reported a $6 billion loss in the third quarter and expects to continue burning cash well into 2025. 

Terms of the Offering 

If demand for the stock offering exceeds expectations, Boeing has the option to issue an additional 13.5 million shares, potentially increasing the funds raised through common stock to approximately $16.05 billion. Coupled with a possible $5.75 billion from the convertible securities, Boeing's total capital infusion could reach a high of $22 billion. 

The convertible securities will offer dividends ranging from 6.0% to 6.5% and come with a 17.5% to 22.5% premium on Boeing’s latest closing stock price of $155.01. These terms aim to attract investors while providing flexibility for Boeing’s capital structure. 

Credit Rating Concerns and Cash Flow Risks 

A significant part of Boeing’s motivation behind the offering is to preserve its investment-grade credit rating. However, S&P Global Ratings has cautioned that the ongoing financial strain from the strike could jeopardize this rating, which would elevate borrowing costs and impact Boeing’s overall financial stability. Boeing recently reported $10.5 billion in cash and marketable securities, but rating agencies indicate that a balance falling below $10 billion could prompt a downgrade. 

Workforce Reduction and Labor Disputes 

The machinists’ union has demanded a 40% wage increase and the reinstatement of a defined-benefit pension plan—proposals Boeing has yet to agree upon. The company has projected monthly losses exceeding $1 billion due to the strike and has announced plans to reduce its workforce by 10% to manage expenses. 

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Future Debt Obligations and Funding Allocation 

Boeing faces $11.5 billion in debt maturing by February 2026 and recently entered a $10 billion credit agreement to ensure liquidity. Additionally, it has committed to issuing $4.7 billion in shares to complete the acquisition of Spirit AeroSystems, taking on Spirit’s existing debt obligations. 

The funds from this offering will go toward general corporate purposes, including the repayment of debt, as Boeing seeks to stabilize its finances and navigate the ongoing labor and production challenges. The company’s actions and the response from both the market and union stakeholders in the coming months will play a critical role in Boeing’s ability to restore financial health and sustain operations.