(News Bulletin 247) – The company published a stock prospectus to issue up to $25 billion through a mix of equity and debt and also announced a new $10 billion credit line. This while his credit rating is threatened.

Weakened by the technical setbacks of its planes, notably the 737 MAX, Boeing is operating on a very narrow crest line. Its financial results are suffering, with the group having burned $8.3 billion in cash over the first six months of 2024. The company has not yet communicated its free cash flow for the third quarter, but the group indicated on Friday , based on preliminary indicators, that operating cash flow alone would be negative to the tune of $1.3 billion.

These heavy cash outflows can be explained by a set of elements, notably lower aircraft deliveries, expenses spent on defense contracts, as well as inventories that are too high compared to actual production rates in the division. civil aeronautics.

Problem: Added to these difficulties are the impacts of a strike which began on September 13 and which risks increasing cash consumption. According to Bank of America, this strike costs approximately $50 million per day and also lengthens the time needed for Boeing to improve the quality of its industrial processes.

>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio

Credit rating under threat

Above all, the rating agencies warned that these walkouts posed a threat to Boeing’s credit rating, currently in investment grade (which marks the border between “good” and “bad” students to simplify). “A prolonged strike could have a significant operational and financial impact, thereby increasing the risk of a rating downgrade,” Fitch warned in September.

For the same reason, S&P was more threatening last week, warning that it had placed the group’s rating on negative review. According to its projections, the aircraft manufacturer will burn $10 billion in cash this year.

S&P then noted that the group risked ending the year with less than $10 billion in available liquidity (its target) if the strike continued throughout the fourth quarter. And with 4 billion reimbursements in April, the agency considered it “likely” that Boeing would seek additional financing to consolidate its cash flow.

If applicable this Tuesday. The company has published a prospectus with the SEC (Securities and Exchange Commission), the American stock market watchdog, in which the company declares that it plans to raise up to $25 billion in new money in various forms (senior debt, subordinated debt, shares, etc.). Airbus’ rival has also reached an agreement with banks Citi, Goldman Sachs, JPMorgan and Bank of America for a credit line totaling $10 billion.

Shares fall 40% in 2024

Bank of America notes that the prospectus issued to the SEC is valid for three years.

“As we previously indicated, we expected Boeing to issue between $10 billion and $15 billion in equity to maintain its investment grade credit rating (..;) Although the amount of (the raising of money) has not yet been disclosed, we consider the extension of the deadline as a positive element,” writes Bank of America.

“We believe Boeing will offer equity first, which should strengthen the company’s balance sheet in the near term while retaining the option to later issue equity debt with a lower risk of credit rating downgrade “, continues the American bank.

On Wall Street, these actions are relatively well received by the market, with Boeing shares gaining 1% around 5 p.m. when the S&P 500 fell 0.3%. But over the whole of 2024, Boeing plunges by 42%….