Major Stock Offering to Secure Liquidity
Boeing is taking decisive steps to improve its financial standing by initiating a significant stock sale. The aircraft manufacturer plans to raise approximately $19 billion (€17.56 billion) to boost its liquidity amid ongoing strike action that has persisted for more than a month.
Share Sale Details
In a statement released on Monday, Boeing announced its intent to offer 90 million common shares, projected to be valued around $14 billion (€12.94 billion). Additionally, the company will raise $5 billion (€4.62 billion) through the sale of depositary shares. The funds generated from this offering will support various corporate initiatives, including debt repayment, working capital, and investments in its subsidiaries.
Leadership Priorities Amid Financial Struggles
Kelley Ortberg, the new CEO of Boeing who assumed the role in August, has made securing additional funds a critical priority. The company faces mounting concerns regarding potential credit rating downgrades due to a series of scandals, strikes, and operational issues impacting its performance.
Impact of the Ongoing Strike
Boeing’s workers have been on strike since September, advocating for improved wages and better pension and healthcare benefits. The ongoing industrial action is costing the company around $50 million (€46.22 million) daily, further complicating its financial recovery.
Rejected Contract Proposal and Continued Strikes
Last week, factory workers rejected Boeing’s latest contract offer, ensuring that the strike will persist. Union leaders in Seattle reported that 64% of International Association of Machinists and Aerospace Workers members who voted chose to reject the proposal, indicating substantial discontent among the workforce.
A Challenging Year for Boeing
This labor dispute unfolds during an already turbulent year for Boeing, which is under scrutiny from multiple federal investigations. One incident that drew attention involved a door panel detaching from a 737 Max during an Alaska Airlines flight in January, further shaking public confidence in the company.
Financial Losses and Cash Flow Issues
The strike has significantly impeded Boeing’s revenue generation, particularly from new aircraft deliveries to airlines. Last Wednesday, Boeing disclosed a staggering third-quarter loss exceeding $6 billion (€5.55 billion), marking it as the second-worst quarter in the company’s history and continuing a streak of unprofitable years since 2018.
Mounting Debt and Financial Outlook
Boeing’s cash management woes deepened with nearly $2 billion (€1.85 billion) burned during the quarter, leaving the company’s balance sheet heavily encumbered with $58 billion (€53.61 billion) in debt. Chief Financial Officer Brian West indicated that Boeing will likely not see positive cash flow until the latter half of next year, emphasizing the urgent need for financial revitalization.
SOURCE: Ref Image from Aviation Business Middle East
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