BUSINESS-ECONOMY
Boeing is set to raise up to $25 billion to strengthen its balance sheet. In a recent filing, the company announced a $10 billion credit agreement with banks amid warnings from credit rating agencies about a potential loss of its investment-grade status as detailed in a report. Details of the plan to raise capital On October 15, Boeing disclosed plans to raise this capital through shares or debt over the next three years, aiming to improve liquidity as it grapples with a prolonged machinist strike and ongoing issues across its aircraft programs, as reported by CNBC. Boeing stated that this universal shelf registration would allow the company to explore various capital options to support its balance sheet during this period. Since the beginning of the year, Boeing's shares have plummeted nearly 42 per cent. Analysts from Bank of America project that the company will raise between $10 billion and $15 billion in equity. Analyst Ron Epstein noted that Boeing is likely to prioritize equity offerings initially, which would help stabilize its balance sheet while keeping the option open for future debt issuance with a lower risk of credit downgrades. Fitch Ratings commented that Boeing's announcement would enhance financial flexibility and alleviate immediate liquidity concerns. The company is under pressure from credit rating agencies, including S&P Global Ratings, which estimated last week that the machinist strike is costing Boeing over $1 billion each month. Negotiations between the two sides remain stalled. On Tuesday, four US lawmakers from Washington state urged Boeing’s new CEO Kelly Ortberg and union leaders Jon Holden and Brandon Bryant to reach a resolution. They expressed hope for a fair and sustainable agreement that acknowledges the machinist workforce's significance to Boeing's future and the broader aerospace economy in the Pacific Northwest. Additionally, Boeing confirmed its $10 billion credit agreement with a consortium of banks, stating that it provides short-term liquidity as the company navigates challenging conditions. The firm has not yet utilised this facility or its existing credit revolver. In a cost-cutting measure, Boeing CEO Ortberg announced plans to lay off approximately 17,000 employees, or 10 per cent of Boeing's global workforce. He emphasised the need for a realistic approach to achieving key recovery milestones and focusing resources on core operations. This announcement coincided with preliminary financial results revealing significant losses and $5 billion in charges within Boeing’s defense and commercial airplane divisions. Ortberg is scheduled to hold his first quarterly investor call since taking over as CEO in August on October 23. A journalist, writing for the WION Business desk. Bringing you insightful business news with a touch of creativity and simplicity. Find me on Instagram as Zihvee, tr None
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