Boeing's Plan to Raise Over $15 Billion

Boeing is preparing to initiate a significant financial strategy aimed at raising over $US15 billion. According to anonymous sources familiar with the situation, this information was first reported by Reuters on October 16.

The aerospace manufacturer plans to generate capital through a combination of common shares and a mandatory convertible bond, as the company looks to improve its financial situation, which has been adversely affected by an ongoing strike.

The capital raise is expected to be composed of stock sales and convertible preferred shares, with the total amount potentially increasing depending on investor demand.

As of Sunday, Boeing had no official comment regarding these developments.

Recent Strike Impact

Recently, Boeing machinists voted against the company's proposal to end a strike that has disrupted the production of the 737 MAX. This decision indicates ongoing labor issues, contributing to the company's operational challenges.

Just last week, machinists rejected Boeing's latest offer, which sought to resolve the labor dispute affecting production capabilities.

Financial Challenges Faced by Boeing

Boeing has been grappling with significant financial difficulties this year. In a regulatory filing earlier this month, the company noted that it might need to raise up to $US25 billion through both stock and debt issuance, particularly as its investment-grade credit rating hangs in the balance.

In addition to facing enhanced regulatory scrutiny and production limitations, Boeing's reputation has suffered due to incidents such as the mid-air failure of a door panel on a 737 MAX aircraft in January.

The company reported a substantial quarterly loss of $US6 billion recently, indicating a continued struggle to maintain financial stability.

Earlier this month, Boeing secured a $US10 billion credit agreement with major financial institutions including Bank of America, Citibank, Goldman Sachs, and JPMorgan.

Job Cuts and Future Plans

The company has also announced a significant reduction in its workforce, planning to eliminate 17,000 jobs, which accounts for 10% of its global staff. Additionally, the first deliveries of the long-awaited 777X jet have been postponed by a year.

Credit rating agencies, including S&P, Moody's, and Fitch, have warned that they could downgrade Boeing's ratings to junk status if the company proceeds with raising new debt without paying off approximately $US11 billion of existing debt due by February 1, 2026.

Boeing, capital, financial