Boeing’s $19B share sale covers near-term financial needs, analysts say

Boeing’s (NYSE:BA) effort to raise about $19 billion to strengthen its balance sheet following a series of setbacks is positive for the aviation giant in the near term, analysts say.

The company on Monday said it planned to stage concurrent underwritten public offerings. The first would raise almost $14 billion with the sale of 90 million shares of its common stock, and the second would see $5 billion in proceeds from selling newly issued preferred stock.

Boeing (BA) also will grant underwriters an option to buy as many as 13.5 million additional shares and $750 million of depositary shares. The total amount will be determined by the demand for the offerings and the share price at the end of the trading day.

“We estimate it needs approximately $18 billion through early 2026 for cash burn and upcoming maturities, assuming timely strike resolution and no further production issues,” Matthew Akers, analyst at financial-services firm Wells Fargo, said in an October 28 report.

Shares of Boeing (BA) fell 1.1% on Monday.

Boeing’s (BA) debt maturities include $4.3 billion due in May and another $7 billion due in the first quarter of 2025. Wells Fargo estimated that Boeing (BA) will burn through $6 billion to $7 billion in cash through the end of next year, while the average estimate among Wall Street analysts is for a cash burn of $4 billion to $5 billion.

“We note today’s capital raise only covers near-term liquidity, while not repairing the company’s balance sheet,” Akers said. “Beyond the raise, we model net debt peaking at $35 billion-plus in 2025.”

Analysts at financial-services firm Jefferies said Boeing’s (BA) planned fundraising was greater than they had expected.

“We had newly built into our estimates approximately $15 billion of equity raised by year-end, worth 100 million shares of dilution or roughly 16% of the third quarter’s ending average diluted share count of 619 million,” Sheila Kahyaoglu, analyst at Jefferies, said in an October 28 note to clients.

The longer-term fix for Boeing’s (BA) balance sheet is to generate cash flow by delivering finished planes to customers. In addition to the worker strike, Boeing (BA) faces impediments from air-safety officials that want the company to improve product quality and safety. The Federal Aviation Administration in January capped Boeing’s (BA) output of the best-selling 737 Max after a newly built model of the plane lost a door panel shortly after takeoff.

Divesting Space Business

Boeing (BA) also can raise cash by selling its space-exploration unit, Akers said, citing a report in The Wall Street Journal. According to the newspaper’s sources, Boeing (BA) is weighing a sale of its business that supplies the National Aeronautics and Space Administration with rockets, spacecraft and other equipment.

Boeing (BA) and partner Lockheed Martin (LMT) also have sought a buyer for their United Launch Alliance joint venture. The company focuses on rocket launches for U.S. national security.

Avoiding Downgrade

Boeing (BA) needs cash to maintain its investment-grade rating and to fund the restart of its factories when the strike ends. A downgrade would raise Boeing’s (BA) borrowing costs and limit its ability to issue debt.

The company (BA) last week reported a $6 billion loss for the third quarter and said it had burned through another $2 billion of cash.

“It will take time to return Boeing (BA) to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” new Chief Executive Kelly Ortberg said in prepared remarks.”

Also last week, striking workers rejected the company’s latest offer, prolonging the strike into a sixth week, as the Associated Press reported.

The rejected offer included pay raises of 35% over four years. That offer improved upon an earlier proposal that featured a 25% increase over four years, which union members rejected as they voted to strike.

The union initially sought 40% pay boosts over three years, and said the yearly raises in the revised offer would total 39.8% when compounded. Boeing (BA) said earlier that the average pay for machinists is currently $75,608 a year.