Boeing is preparing to initiate a major capital raise as early as Monday, seeking to secure over $15 billion through stock sales and convertible preferred shares, according to a source with knowledge of the matter.
The aerospace giant, under mounting financial strain due to a continuing strike, production issues, and increased regulatory scrutiny, is turning to public markets in an effort to strengthen its balance sheet.
The planned capital raise, first reported on October 16, is expected to combine common shares with a mandatory convertible bond, with the potential to exceed $15 billion depending on investor demand. Boeing declined to comment on the timing, but Bloomberg News cited Monday as the target date for the launch.
The cash infusion comes at a critical time for Boeing, which has been hit by a series of setbacks, including a strike by machinists that has delayed production of its flagship 737 MAX aircraft. Last week, union members voted by a nearly two-to-one margin to reject the company’s latest offer, effectively prolonging the strike.
In response to its ongoing cash burn, Boeing recently reported a quarterly loss of $6 billion. The company also warned investors in regulatory filings that it may need to raise up to $25 billion in stock and debt if it wants to maintain its investment-grade credit rating, which is currently under review.
The three major credit rating agencies, S&P, Moody’s, and Fitch, have stated they would downgrade Boeing’s rating to “junk” status if the company raises new debt without retiring $11 billion of existing debt that matures through early 2026.
Boeing has already taken several measures to cut costs and shore up liquidity. Earlier this month, the company announced plans to cut 17,000 jobs, amounting to 10% of its global workforce, and delay the delivery of its 777X jet by a year.
Additionally, Boeing recently secured a $10 billion credit agreement with a consortium of major lenders, including Bank of America, Citibank, Goldman Sachs, and JPMorgan.
Boeing’s financial troubles have been compounded by a loss of customer confidence following a series of production issues and regulatory concerns.
In January, an incident involving a 737 MAX, in which a door panel detached mid-air, led to heightened regulatory scrutiny of the model, further impacting Boeing’s reputation and production.
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