Boeing is taking steps to secure billions in additional funds as it works to bolster its troubled balance sheet amid a costly machinists strike.
The US aircraft manufacturer has reached an agreement with lenders to secure up to $10 billion in additional credit, the company said in a 15 October securities filing.
Boeing also filed separate documents as a precursor to raising as much as $25 billion in additional funds by selling stock or issuing unsecured debt – a so-called “shelf registration”.
“These are two prudent steps to support the company’s access to liquidity,” Boeing says.
The $10 billion in new credit “provides additional short-term access to liquidity as we navigate through a challenging environment. The company has not drawn on this facility or its existing credit revolver”, Boeing adds.
The “shelf registration” for up to $25 billion in additional funds gives Boeing “flexibility” to raise more cash if needed over three years.
The pending capital raises come as Boeing faces an increasingly concerning financial position due largely to a strike by its 33,000-strong machinists’ union, which has forced Boeing to halt 737, 767 and 777 production. Workers walked off the job on 13 September, more than four weeks ago.
Boeing’s finances have also been battered in recent years by countless other troubles, most notable production quality problems.
Boeing on 11 October revealed the strike’s financial impact when it released preliminary third-quarter results, saying it lost more than $6 billion in the period. On that day, Boeing also said it will lay off some 17,000 workers (10% of its global workforce) and that it plans to end 767 production. It also pushed back the 777-9’s expected service entry by one year, until 2026.
Boeing ended September with $10.5 billion in cash and investments in marketable securities – about the minimum financial analysts estimate Boeing needs to operate.
Financial firm Jefferies estimates the strike is costing Boeing $1.3 billion monthly.
The company plans to release its complete third-quarter results on 23 October.
