Boeing plans to raise up to $35B to shore up finances as strike continues
Boeing plans to use the $35B in financing to manage its debt and for corporate operations
Boeing CEO Kelly Ortberg moved to Seattle while 33,000 of the companys workers took to the picket line. (Credit: Derrick Louie with Clarity Northwest Photography & Laura Halliday with Realogics Sothebys International Realty and KCPQ)
Aerospace giant Boeing on Tuesday indicated in a regulatory filing that it plans to raise up to $25 billion in a stock and debt offering while it also entered into a $10 billion credit agreement as it faces an ongoing strike that has affected production along with upcoming debt payments.
The company is looking to solidify its finances after production of its best-selling 737 Max jets was capped by regulators earlier this year after one of the airliners suffered a midair blowout of a door panel, causing a cabin depressurization.
A strike by thousands of unionized machinists began on Sept. 13 and has resulted in production being temporarily paused for the 737 Max, 767, 777, P-8, KC-46A Tanker and the E-7 Wedgetail. The strike is costing the company more than $1 billion per month, according to an estimate that was released before Boeing announced it would cut 17,000 jobs or 10% of its global workforce.
"These are two prudent steps to support the company's access to liquidity," Boeing said in a statement to FOX Business. "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."
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Boeing announced plans to bring in up to $35 billion in financing amid the ongoing machinists union strike. (Photographer: David Ryder/Bloomberg via Getty Images / Getty Images)
"The credit facility provides additional short term access as we navigate through a challenging environment. The company has not drawn on this facility or its existing credit revolver," Boeing added.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 143.87 | +3.68 | +2.63% |
According to the filing, Boeing will use the funds for general corporate purposes. The company had cash and cash equivalents of $10.89 billion as of June 30.
The strike by the International Association of Machinists union and its 33,000 workers in Washington and Oregon began on Sept. 13, after the union rejected a deal that would've seen a general wage increase of 25% with a $3,000 signing bonus – as well as a commitment to build Boeing's next commercial jet in the Seattle area.
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Production of Boeing's best-selling 737 Max was paused earlier this year and remains subject to a regulatory cap. (GEOFFROY VAN DER HASSELT/AFP via Getty Images / Getty Images)
The two sides remain at an impasse and talks have become increasingly heated as the strike drags on. Acting Labor Secretary Julie Su met with Boeing and the union in Seattle on Monday in an effort to break the deadlock.
Last month, Boeing CFO Brian West said at a Morgan Stanley conference that the company was "constantly evaluating our capital structure and liquidity levels to ensure that we could satisfy our debt maturities over the next 18 months while keeping confidence in our credit rating as investment grade."
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Boeing and the machinists union are continuing to negotiate as the strike enters its fifth week. (JORDAN GALE/AFP via Getty Images / Getty Images)
Boeing has $11.5 billion of debt maturing through Feb. 1, 2026, and has committed to issuing $4.7 billion of its shares to acquire Spirit AeroSystems and assume its debt.
The timing of Boeing's stock offering and the amount it plans to raise remains unclear, but analysts estimate that Boeing would need to raise between $10 billion and $15 billion to maintain its credit ratings, which are currently just one notch above junk status.
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FOX Business' Aislinn Murphy and Reuters contributed to this report.