Boeing Co. is considering raising at least $10 billion by selling new stock, as the planemaker seeks to replenish cash reserves depleted further by an ongoing strike, according to people familiar with the discussions.
The company is working with advisers to explore its options, said the people, asking not to be identified discussing confidential matters. Raising equity isn’t likely to happen for at least a month, assuming the planemaker can resolve the strike, because Boeing wants a firm grasp of the financial toll from the walkout by 33,000 workers, the people said.
A spokesman for Boeing declined to comment. No final decision on timing and the amount has been made, and Boeing could end up deciding against the move, the people said.
Boeing is under pressure to shore up its finances and hold onto its investment-grade credit rating. The company is one step away from dropping into speculative territory, which would further drive up the cost to service its $58 billion debt load. The situation has been exacerbated by the strike now in its third week that has shut down output of Boeing’s single-aisle airliner, as each day of stoppage further dents reserves.
The US planemaker has seen its financial reserves dwindle in the wake of a near-catastrophic accident in January that forced Boeing to slow production of its cash-cow 737 Max airliner. Should Boeing proceed, a sale of that magnitude would stand to be the biggest by a public company since Saudi Arabian Oil Co.’s $12.3 billion sale in June.
Boeing’s shares rose less than 1% as of 1:42 p.m. in New York. The stock had declined 42% this year through Monday’s close, lowering its value to $93.6 billion and putting Boeing on course for its worst annual return since the financial crisis in 2008.
While a potential sale may dilute stock owners, the extra funds would help the company maintain its investment grade credit rating, said Rob Stallard, an analyst with Vertical Research Partners. He said the equity raise could reach as high as $15 billion.
Suspended Talks
Boeing faces a liquidity squeeze after burning through $8.25 billion in free cash during the first half. The US planemaker slowed work on its cash-cow 737 Max and other jets to address quality lapses brought to light by the accident on an aircraft on Jan. 5. Workers have rebuffed two offers from the company for higher pay, and the two sides have engaged a mediator to help overcome the impasse.
