Boeing to raise as much as $25 billion to shore up balance sheet

Boeing said Tuesday that it could raise as much as $25 billion in shares or debt over three years, a move to increase liquidity as the troubled manufacturer faces a more than monthlong machinist strike and problems throughout its aircraft programs.

“This universal shelf registration provides flexibility for the company to seek a variety of capital options as needed to support the company’s balance sheet over a three year period,” Boeing said in a statement.

Boeing shares are down nearly 42% this year as of Tuesday.

Bank of America aerospace analysts have estimated that Boeing will raise between $10 billion and $15 billion in equity.

“We expect Boeing to offer equity first, which should shore up the company’s balance sheet in the near term while maintaining the option to later issue equity debt with a lower risk of a credit downgrade,” BoFA analyst Ron Epstein wrote Tuesday.

Fitch Ratings said Boeing’s announcement Tuesday will “increase financial flexibility and moderate near-term liquidity concerns.”

Boeing is trying to shore up its balance sheet as it faces warnings from credit ratings agencies that it could lose its investment-grade rating.

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S&P Global Ratings, one of the agencies that warned about a downgrade, last week estimated that the machinist strike is costing Boeing more than $1 billion a month.

The two sides have been at an impasse. On Tuesday, four U.S. lawmakers representing Washington state wrote to Boeing’s new CEO, Kelly Ortberg, Jon Holden, president of IAM District 751, and Brandon Bryant, president president of IAM District W24, urging the parties to come to a solution.

The lawmakers said they hoped they will “will expeditiously work out a fair and durable deal that recognizes the importance of the machinist workforce to Boeing’s future, the aerospace economy of the Pacific Northwest, and the nation,” in the letter, signed by Washington state Democrats, Sens. Maria Cantwell, Patty Murray and U.S. Rep. Adam Smith and Rep. Rick Larsen.

Earlier, Boeing separately said in a filing that it has an agreement with a consortium of banks for a $10 billion credit agreement.

“The credit facility provides additional short term access to liquidity as we navigate through a challenging environment,” the company said in a statement. “The company has not drawn on this facility or its existing credit revolver.”

On Friday, Ortberg, warned that the company plans to lay off about 17,000 employees, or 10% of its global workforce to cut costs.

“We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery,” he said, adding that Boeing needs to focus resources on “areas that are core to who we are.”

The announcement came alongside preliminary financial results, showing mounting losses and $5 billion in charges in Boeing’s defense and commercial airplane units.

On Oct. 23, Ortberg will hold his first quarterly investor call since becoming Boeing’s CEO in August.

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