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Boeing launches massive $15 billion funding drive to restore financial stability amid 737 MAX woes of ongoing strike and regulatory scrutiny

Boeing is preparing for a huge capital-raising campaign, expected to go past $15 billion, as plans come closer and will likely be made public as early as this Monday, a source who has been briefed on the matter said. The aerospace company is facing serious financial strain, and it is even getting worse due to the extended 737 MAX strike.

Reuters reported on 16 October that Boeing was close to a deal to raise around $15 billion by considering an option to enhance cash by issuing common shares along with an essential convertible bond.

This will be raised through a combination of equity sale and convertible preferred stock, which is said to possibly rise based on the market demand, according to a source. Boeing is tight-lipped on this, but Bloomberg News said it will likely start its capital raising as early as November 4.

Boeing's financials have fared worse than what was expected for this year, not just because of the continued production bans but also because of increasing regulatory pressures and, gradually, customer confidence as well. In January 2024, a mid-flight door panel came loose on a 737 MAX plane, further raising safety issues about the model and raising the scrutiny level. Even the labour force has troubled the company's operations lately: last week, the machinists voted against a new offer that should have ended the strike going on at the 737 MAX production line.

Earlier this October, Boeing disclosed in regulatory filings that it could raise as much as $25 billion through stock and debt issuance. But Boeing's investment-grade credit rating is up for grabs as the aerospace giant is under threat from potential downgrades by major rating agencies. S&P, Moody's, and Fitch all said that they could lower Boeing's credit rating to junk status in case the company issues new debt without clearing the part of its $11 billion debt due before February 2026.

Beyond funding, Boeing announced sweeping cutbacks and operational overhauls. The company barely announced that it would slice an additional 17,000 jobs from its rolls-that is, 10% of its global workforce-besides delaying the launch of its long-overdue 777X jet, a full year. Indeed, Boeing's financial condition was underscored last week when the company said its quarterly loss was $6 billion.

In addition, Boeing obtained a $10 billion credit line earlier this month with several prominent financial institutions, including Bank of America, Citibank, Goldman Sachs, and JPMorgan. Boeing faces critical financial decisions in the months ahead as it works to stabilize its position amid substantial challenges in the aerospace sector, where its investment-grade rating is potentially at risk.