Boeing asks investors for another $19bn

Boeing, the troubled American aircraft manufacturer, is asking investors to pump in about $19 billion to bolster its balance sheet and protect its investment-grade credit rating from being cut to junk status.
The company, whose finances have been squeezed by a number of safety issues as well as an ongoing month-long strike, announced its plans on Monday after reporting a $6 billion third-quarter loss last week.
The manufacturer plans to sell 90 million new shares, worth close to $14 billion based on the stock’s current market price, as well as $5 billion of depositary shares that would convert into preferred shares.
Boeing, whose headquarters are in Virginia, declined to expand on its stock market filing, which suggested that any money raised would be used for “general corporate purposes”.
The company flagged only two weeks ago that it would try to raise up to $25 billion from investors and analysts expect the new shares will be priced fairly close to the current market price. On Monday, Boeing’s shares were $2.04, or 1.3 per cent, lower at $152.89 by lunchtime in New York, down more than 41 per cent since the start of the year.
Boeing is one of the world’s two largest aeroplane makers and has faced a series of crises since it had to ground its 737 Max jets following two crashes in 2018 and 2019 that killed 346 passengers and crew.
Its reputation suffered another blow in January this year when a door panel blew off mid-flight, prompting the regulator to impose a cap on production of its Max jets.
Most recently, manufacturing of its commercial planes on the west coast of America has been hit by industrial action, with 33,000 machinists walking out in a dispute over pay and benefits. The strike began in mid-September and is estimated to be costing Boeing $50 million a day. The company’s latest offer was rejected last Wednesday.
The impact of the regulatory controls on production as well as the strike was revealed in its finances last week, when it announced a $6.2 billion loss for the three months to the end of September. It has used $10 billion of cash so far in 2024 — half of its cash pile — and bosses expect it will continue to burn cash into 2025.
The group’s debt pile stands at $58 billion and all three of the major credit rating agencies rate Boeing one notch above junk status. The company’s rating has never fallen below investment grade, but one agency, S&P Global Ratings, warned that could change if its cash position fell much further.
Kelly Ortberg, who took over as Boeing’s chief executive in August, has the task of restoring the company’s reputation. He called last week for a “fundamental culture change” within the business and accepted that trust in the company has been eroded. Ortberg added that Boeing is “saddled with too much debt” and acknowledged that there have been “serious lapses” in its performance.
“This is a big ship that will take some time to turn but when it does, it has the capacity to be great again,” Ortberg told employees.
In addition to shoring up the balance sheet, Ortberg, 64, announced this month that Boeing would cut 17,000 jobs — a tenth of its global workforce — over the coming months.
Britain is one of Boeing’s largest overseas markets, with about 4,000 staff in the country. Its 30 UK locations include its production facility in Sheffield, the company’s only manufacturing site in Europe.