The Capital Raise Is Only A First Step In Turning Around Boeing

Summary:

  • Boeing’s recent equity raise is likely to preserve the company’s investment grade credit rating, despite causing significant dilution of common equity.
  • Being part of an effective duopoly for wide body and large narrow body commercial aircraft makes Boeing strategically important for customers and the US Federal Government.
  • However, the same is not true for its shareholders.
  • The ongoing strike will cost a substantial sum, as will presumably its eventual solution, the worst-case scenario being the return of defined benefit pensions.
  • Beyond financials, Boeing faces a number of underlying problems, that cannot be fixed with money alone.
Boeing 737-7 MAX, N7201S. Farnborough International Airshow, July 16, 2018

A Boeing 737 MAX – arguably the company’s most famous “problem aircraft”

Wirestock

Earlier this week, The Boeing Co. (NYSE:BA) conducted a substantial capital increase in an attempt to brace against the fallout from a strike as well as its pre-existing problems. While it results, 15 percent dilution of common equity, this step is, on


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