Boeing plans close to $20b capital hike to boost liquidity

TEXAS – Boeing is planning to launch a capital-raising exercise as early as Oct 28, according to people familiar with the matter, in an offering that would help the beleaguered airplane maker boost its liquidity.

The company is set to raise more than US$15 billion (S$19.8 billion) from the fund-raising, one of the people said, adding that the amount could still rise depending on demand.

Boeing’s advisers have been lining up potential investors for the offering, according to people familiar with the matter, who asked not to be identified as the information is not public.

The transaction is likely to include shares as well as debt that can be converted into equity, the people said.

The company on Oct 23 received clearance from the US Securities and Exchange Commission to sell as much as US$25 billion of equity and debt, a move that could help Boeing avoid having its credit rating downgraded to junk.

Deliberations are ongoing and details of the offering, such as timing, could still change, the people said. A Boeing representative declined to comment.

A US$15 billion share sale would be the largest equity offering since SoftBank Group sold part of its stake in T-Mobile US in 2020, data compiled by Bloomberg shows.

Boeing needs the capital infusion to maintain its investment-grade rating and fund its eventual recovery from a crippling strike, now in its seventh week.

The company is on pace to use around US$4 billion in cash during the fourth quarter, which would bring its free-cash outflow to around US$14 billion for the year.

The plane maker expects to continue burning cash through the first half of 2025 as it restarts its airplane factories, including the assembly lines for its cash-cow 737 Max jetliner.

Boeing factory workers voted last week to reject the company’s latest contract offer, which included a wage increase of 35 per cent spread over four years.

The company plans to cut its workforce by about 10 per cent, with reductions potentially including executives and managers, chief executive Kelly Ortberg said in a memo to employees on Oct 11.

The company said on Oct 15 that it has a separate new credit agreement in place for US$10 billion, giving it “additional short-term access to liquidity as we navigate through a challenging environment”.

The Arlington, Virginia-based company reported third-quarter results on Oct 23, with revenue of US$17.8 billion missing expectations and its two largest businesses both reporting widening losses. Boeing shares have slumped more than 40 per cent in 2024.

Boeing is considering options to streamline its broad portfolio, with Mr Ortberg having begun a review of its businesses that he expects to conclude by the end of the year. BLOOMBERG