Boeing is reportedly getting close to finalizing a plan to raise $15 billion in financing to help deal with the economic challenges the company is currently facing due to a strike involving more than 33,000 workers.
The aerospace giant plans to raise the amount with common shares and a mandatory convertible bond, Reuters reported, citing sources with knowledge of the matter.
In the regulatory filings Tuesday, the jet maker said that it might be able to raise as much as $25 billion in shares and debt, although its investment-grade credit rating hangs in the balance.
While the proposed $15 billion in financing may not fully address the company's current challenges, the report suggests that Boeing is also exploring a structured finance transaction that could generate around $5 billion, possibly through securitizing a portion of a subsidiary's revenues.
Boeing has faced increasing regulatory scrutiny, production curbs, and waning customer confidence following an early January incident where a door panel of a 737 MAX plane blew off midair. Despite a 1% gain in share value on Wednesday, the stock has declined more than 40% this year.
The company's revenues have not been promising throughout the year, prompting announcements that it will raise funds in the capital markets, and a $10 billion credit agreement secured with major lenders including Bank of America, Citibank, Goldman Sachs, and JPMorgan.
"The timing of any equity raise is still unclear but market consensus is that it should be done after the labor strike is resolved and earnings provide some visibility of its impact on current and future cash flows," said Michael Barr, senior research analyst at Neuberger Berman.
Though Boeing has used less of its cash reserves in the third quarter, it may still need to act before the end of the strike to protect its investment-grade rating.
About 33,000 Boeing workers in the Pacific Northwest have been on strike for nearly a month, seeking higher wages and improved retirement benefits. Workers complain of more than a decade of stagnant wages amid rising inflation.
Boeing staff with the International Association of Machinists and Aerospace Workers (IAM), walked off the job on Sept. 13 after overwhelmingly rejecting a contract offer.
The direct financial impact of the first month of the strike cost Boeing more than $3 billion, according to Anderson Economic Group.
