Boeing reportedly considering issuing $10 billion in new shares as strike continues

By Ciara Linnane

Stock falls premarket on news of potentially dilutive stock offering

Shares of Boeing Co. fell 2.6% early Tuesday after a Bloomberg report said the aerospace giant was considering raising at least $10 billion by issuing new shares to shore up cash reserves depleted by the strike.

Boeing (BA) is working with advisers to explore its options, Bloomberg said, citing people familiar with the talks. The capital increase is unlikely to happen for at least a month, and it is assumed that the company can end a strike by its machinists, a 33,000-strong group that has been shutting down vehicles due to wages. Boeing wants to fully grasp the financial ramifications of the strike, people who spoke to Bloomberg said.

Boeing declined to comment to Bloomberg. The company did not immediately respond to a request for comment from MarketWatch.

The report stated that the company may ultimately decide not to issue shares.

The strike comes at a difficult time for Boeing, which is trying to recover from a series of production missteps. Boeing introduced unpaid leave for non-union workers to preserve cash while the strike continues.

Management is trying to maintain the company’s investment grade rating, which is at risk of being scrapped by three rating agencies. Moody’s Ratings and Fitch Ratings said the strike would pose a risk to the company’s credit, especially if it continued for a long period of time.

S&P Global Ratings said it did not expect the strike to affect its rating, at least for now.

All three rating agencies rate Boeing’s credit at the lowest level of investment grade. The company has $45 billion in debt, which would be more expensive to pay off if it were reduced to junk. This would also exclude bonds from a much larger pool of investors, including pension funds, who can only borrow at investment grade.

Last week, the company’s outstanding bonds were holding up as its stock fell, but analysts said that had more to do with the current strength of credit markets after the Fed’s latest 50 basis point rate cut than confidence in the United States. Boeing.

The company burned through $8.25 billion in free cash in the first half, and Bloomberg data shows it will see another $3.36 billion in cash outflows in the third quarter.

Now look: Why Boeing’s bonds are a hot item right now, unlike stocks.

The stock has fallen 41.7% year-to-date, while the S&P 500 has gained 20.8%.

-Ciara Linnane

This content is from Dow Jones & Co. Created by MarketWatch, operated by . MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones News Wire

10-01-24 0718ET