Boeing, in need of cash, looking to raise up to approximately $19B in offering

Boeing is looking to raise up to approximately $19 billion in a stock offering as the aerospace giant, which is dealing with a contentious strike, faces liquidity issues and tries to raise cash.

Boeing Co. said Monday it will offer 90 million in common stock and $5 billion in depositary shares. The company’s stock closed at $155.01 on Friday.

The company said it plans to use the net proceeds for general corporate purposes, which may include repaying debt, additions to working capital, capital expenditures and funding and investments in its subsidiaries.

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Fitch Ratings said Monday that the offering supports debt repayment and increases financial flexibility, alleviating the risk of a downgrade. The agency said it continues to evaluate Boeing’s ability to resolve its labor negotiations and regain operational momentum. It rates Boeing “BBB-,” the lowest investment-grade rating.

“It’s just basically padding your bank account,” Scott Hamilton, an aviation analyst with Leeham Company, told KIRO Newsradio. “It also gives them some more cash that’s going to be needed to pay off some debt. They have billions of dollars in debt next year.”

Hamilton cited Boeing’s past announcement it would need about $10 billion in cash to run the company but “of course that was when the company was operational and not on strike.”

The strike, now in its 7th week, will continue for the foreseeable future. As of Monday, the International Association of Machinists and Aerospace Workers told KIRO Newsradio it was once again working with the Department of Labor to arrange future bargaining sessions, but that none are planned. Some analysts estimate it is causing a loss of about $100 million a day for Boeing.

During the third-quarter earnings call on October 23, Boeing posted an operating loss of about $6 billion and said it expects to bleed cash into 2025.

While the strike is only part of a series of issues that has led Boeing to dire financial straits, Hamilton said the move to sell 90 million in common stock is “a whole blood transfusion – this isn’t a saline drip.”

“It’s necessary because Boeing, with five years of crisis after crisis after crisis, is in really, very poor financial condition,” he said.

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The labor standoff comes during an already challenging year for Boeing, which became the focus of multiple federal investigations after a door panel blew off a 737 Max plane during an Alaska Airlines flight in January.

The company burned nearly $2 billion in cash, in the quarter, weakening its balance sheet, which is loaded down with $58 billion in debt. Chief Financial Officer Brian West said the company will not generate positive cash flow until the second half of next year.

Shares of Boeing declined slightly in midday trading. They have lost 40% of their value in the year to date.

Contributing: Sam Campbell, KIRO Newsradio and The Associated Press