Boeing (BA.N) announced plans on Tuesday to raise up to $25 billion through stock and debt offerings, alongside a $10 billion credit agreement with major lenders, as the company seeks to stabilize its finances amid ongoing production and regulatory issues.
While it remains unclear how much Boeing will ultimately raise, analysts estimate the company needs between $10 billion and $15 billion to maintain its credit ratings, which are currently just one notch above junk status.
This year, Boeing has faced a series of crises, beginning with a 737 MAX jet incident in January when a door panel blew off mid-flight. Since then, its CEO has resigned, production has slowed due to regulatory investigations, and in September, 33,000 union workers went on strike.
The company is scrambling to shore up its finances as it faces potential credit downgrades after three consecutive quarters of cash burn. The ongoing strike alone is estimated to be costing Boeing roughly $1 billion a month, and the company has announced plans to cut 17,000 jobs to reduce expenses.
Despite these challenges, Boeing’s stock rose 2.1% on Tuesday. S&P Global and Fitch indicated that the stock and debt sales could help Boeing preserve its investment-grade credit rating, with S&P’s Ben Tsocanos calling the additional credit facility “a sensible precaution.”
However, not all analysts were convinced. Nick Cunningham of Agency Partners expressed skepticism, noting the vagueness of the fundraising announcement and suggesting that banks might be struggling to attract investors.
Boeing clarified that it had not yet drawn on the new $10 billion credit facility, arranged by BofA, Citibank, Goldman Sachs, and JPMorgan, or its existing revolving credit facility. The company said these steps were meant to ensure access to liquidity and support its balance sheet over the next three years.
Industry leaders have raised concerns over Boeing’s ability to survive its current crisis. Emirates Airlines President Tim Clark suggested that Boeing could face an investment downgrade or even bankruptcy unless it raises significant funds.
As of June 30, Boeing held $10.89 billion in cash and cash equivalents, which it plans to use for general corporate purposes, according to filings with U.S. regulators.