- Boeing is raising up to $24.3 billion to address funding shortfalls.
- The company reported a net loss of $6.1 billion in the third quarter.
- The airline has faced several challenges this year, including a union strike and the bankruptcy of Alaska Airlines.
Boeing is in need of cash and could raise up to $24.3 billion to improve liquidity.
The aircraft maker announced late Monday that it would offer 112.5 million shares of its common stock at a discounted price of $143. On the same day, the company announced that it would sell 90 million shares of its common stock.
The company’s offering also includes $5 billion worth of depositary shares.
Boeing shares have fallen 40% since the beginning of the year, and closed 2.8% lower at $150.69 on Monday.
The underwriters of the offering also have an option to purchase approximately 17 million common shares and an additional $750 million in deposited shares.
Assuming those options are not exercised, Boeing said net income would be about $21 billion. If the options are exercised, the total sale could reach $24.3 billion.
Boeing said it intends to use the funds for “general corporate purposes,” including debt repayments, capital expenditures and investments in subsidiaries.
Earlier this month, Boeing filed a prospectus saying it could sell up to $25 billion worth of securities, including bonds, new shares and stock options.
This is in addition to $10 billion in credit agreements with Bank of America, Citibank, Goldman Sachs and JPMorgan Chase. Submitted to regulatory authorities on October 14th.
In a statement shared with Business Insider, Boeing previously described the financing activities as “two prudent steps to support the company’s access to liquidity,” which it said were “two prudent steps to support the company’s access to liquidity.” It will help them “survive the environment,” he added.
The company faces a difficult financial outlook.
Last Wednesday, Boeing reported that: Net loss was $6.1 billion In the third quarter. It posted a loss of more than $1.4 billion last quarter.
Credit rating agencies say the company’s bonds are at risk of being downgraded to junk status.
Boeing also reported a $250 million increase in spending on the Starliner project in the third quarter. To date, the company has spent $1.85 billion on the Starliner program.
2024 has been a challenging year for Boeing.
In January, an Alaska Airlines Boeing 737 Max lost its door plug mid-air, sparking intense regulatory scrutiny and customer dissatisfaction, leading to Dave Calhoun’s resignation as CEO.
Boeing is also facing a strike. The strike began on September 13 in response to union members’ demands. rejected the proposal to raise wages 25% increase in 4 years. Last Wednesday, Boeing employees rejected a proposal that would have included a 35% pay increase over four years.
Ron Epstein, an analyst at Bank of America, said: Strikes were costing Boeing $50 million a day..
Also this month, Boeing announced plans to lay off 10% of its workforce and further delay its long-awaited 777X program.
Peter McNally, head of global analyst at Third Bridge, said: “While many expected the IAM strike to be over by now, Boeing needs to maintain its investment-grade credit rating, and in order to do so, We need an equity injection.”