Boeing just announced that it will sell 90 million shares of common stock to raise up to $14 billion. Along with this, the company plans to offer $5 billion in depositary shares.
This isn’t a sudden decision. Boeing suffered a $6 billion loss for the third quarter and is still dealing with a costly strike by the company’s machinists. The strike began in mid-September and is still ongoing. In an effort to end the strike, Boeing offered a 35% pay increase over four years. However, the deal didn’t include pension restorations, so the majority of union members rejected it.
Boeing’s production has slowed because of the strike, and the company has had to rely heavily on its cash reserves. Analysts estimate that each day of the strike costs Boeing tens of millions of dollars. Boeing’s debt is a towering $58 billion and the company is trying everything it can do to major credit agencies downgrading its status.
The company also announced plans to cut 17,000 jobs, about 10% of its workforce.
But the strike isn’t the only issue. Earlier this year, a door panel on one of its planes blew open mid-flight, which raised questions about Boeing’s production standards. The grounding of its Starliner space capsule last month didn’t help much either.
The stock sale will give Boeing cash to use as a financial cushion.
The stakes are high. Boeing’s shares have fallen off a cliff this year, and investors are cautious. The stock sale is crucial for Boeing to regain its footing, especially as it tries to restart production and rebuild trust with both its workers and its customers.
Discover more from Market Business News
Subscribe to get the latest posts sent to your email.