Boeing Pursues Over $15 Billion Capital Increase Amid Strike Challenges

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Boeing Pursues Over $15 Billion Capital Increase Amid Strike Challenges

Boeing Co. (NYSE:BA) is launching a capital raise strategy of over $15 billion today, according to a source familiar with the company's plans. This move comes in response to the financial pressures intensified by an ongoing strike that has disrupted the production of its 737 MAX aircraft.

The company aims to raise funds through the sale of common stock and mandatory convertible bonds, with the potential to increase the total amount depending on investor demand. Details on the capital mix have not been disclosed, and Boeing did not provide a comment on these developments as of Sunday.

The decision to raise capital follows machinists’ rejection of Boeing's proposal to resolve the strike last week at nearly a two-to-one ratio. The labor dispute has brought 737 MAX production to a standstill, contributing to the company's financial strain.

Previously, Boeing indicated in regulatory filings that it could offer up to $25 billion in equity and debt due to its investment-grade credit rating being at risk. The aerospace giant has faced numerous challenges this year, including regulatory scrutiny and production restrictions. Notably, the detachment of a door panel during flight from a 737 MAX in early January caused a loss of confidence among customers.

To manage cash flow, Boeing also entered into a $10 billion credit agreement with major lending institutions, including Bank of America, Citibank, Goldman Sachs, and JPMorgan, earlier in October.

Additionally, Boeing announced plans to reduce its global workforce by 10%, equating to 17,000 jobs, and postponed the initial deliveries of the 777X jet by a year.

Credit rating agencies S&P, Moody's (NYSE:MCO), and Fitch warned that Boeing's ratings could be downgraded to junk status if the company does not address approximately $11 billion in debt due by February 1, 2026, without incurring new debt. The company’s recently announced $6 billion quarterly loss further underscores the urgency of the capital raise for Boeing.