Boeing seeks up to $35bn to bolster balance sheet

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Boeing has announced plans to raise up to $25bn in new capital and agreed a $10bn credit facility, as the US plane maker seeks to shore up its balance sheet in the face of a crippling strike by its largest labour union.

In a filing, Boeing told investors it intended to raise up to $25bn in debt or equity, adding that the move provided “flexibility for the company to seek a variety of capital options as needed . . . over a three-year period”.

It has also struck a separate $10bn “supplemental credit agreement” with a consortium of lenders.

Boeing did not provide details on precisely how much it intended to raise and when. It said it had not drawn on the new credit facility.

“These are two prudent steps to support the company’s access to liquidity,” Boeing said, adding that the credit agreement provided additional short-term access to liquidity as it navigated through a “challenging environment”.

Boeing shares were down about 1 per cent in morning trading in New York.

Nick Cunningham, analyst at Agency Partners, said the vagueness and breadth of the filing and the need for the temporary financing implied “that the banks are struggling to sell this issue to potential investors or lenders”.

He added that while $10bn could be enough to “carry Boeing through its cash flow trough”, the company would need more than $80bn to pay down net debt and develop a new single-aisle jet to catch up with arch-rival Airbus.

The fundraising plan comes as Boeing struggles to deal with the impact of a strike by its largest union that has halted production at factories in Washington state, leading to a possible credit downgrade.

The industrial action by 33,000 members of the International Association of Machinists and Aerospace Workers, which began on September 13, has stopped manufacturing lines of its 737 Max, 767 and 777 planes. 

Rating agency S&P last week warned of a possible downgrade of Boeing’s bonds to junk status, and analysts had said they expected the company to look to raise at least $10bn in new equity.

The group has been grappling with mounting problems since a door panel blew off one of its 737 Max aircraft in mid-flight at the start of January. Regulators demanded that the company slow down production of the best-selling jet as part of a wider effort to improve quality and safety.

Boeing on Friday announced it would cut 17,000 jobs from its operations to stem losses, as it booked about $5bn of pre-tax charges.

It also announced another delay to the 777X to 2026. The company said it had $10.5bn in cash and marketable securities at the end of September — close to the minimum it has said it needs to operate — after burning through $1.3bn in cash during the third quarter.

Boeing had close to $58bn in total consolidated debt at the end of the second quarter.

It will report full results for the third quarter on October 23.

New chief executive Kelly Ortberg, who took the helm in August, told employees that “restoring our company requires tough decisions” as well as structural changes, to ensure that “we can stay competitive and deliver for our customers over the long term”.