Boeing (BA) made two big moves late Monday night to shore up its balance sheet as it faces extremely difficult times ahead.
First, Boeing signed a deal to secure an additional $10 billion in financing from a consortium of banks led by Bank of America Securities, Citibank, Goldman Sachs and JPMorgan. Second, and more importantly, the company has filed a mixed shelf registration with the SEC to offer up to $25 billion in new debt, common stock, preferred stock, and other equity securities.
Earlier, the Wall Street Journal reported that sources said Boeing would pursue a $10 billion stock issuance through a filing. Boeing announced it had $10.3 billion in cash and securities at the end of September.
Boeing shares rose more than 2% in midday trading Tuesday.
The new credit agreement and debt and equity offering come as the company is embroiled in a labor dispute with its largest union and seeks to ramp up production of commercial jets in the wake of the Alaska Airlines 737 Max mid-air door explosion. Ta. There are also numerous examples of whistleblowers alleging manufacturing problems with the 787 Dreamliner wide-body jet.
On Friday, Boeing released its preliminary financial report for the third quarter, as the situation for the aircraft maker becomes more dire. Boeing reported a GAAP loss of $9.97 per share and said it expects operating cash flow to be negative $1.3 billion. The company also plans to end production of the Tanker Jet 767 and postpone the launch of the next Widebody Jet 777X.
The company plans to collect $5 billion before taxes, of which $3 billion will come from its civil aviation sector and $2 billion from its defense business.
New CEO Kelly Ortberg also announced that the company will lay off 10% of its workforce, or approximately 17,000 employees, across all divisions to strengthen its financial position.
Signs are posted on utility poles as Boeing workers strike outside the company’s factory in Renton, Wash., on Tuesday, Sept. 24, 2024. (AP Photo/Lindsay Wasson) (ASSOCIATED PRESS)
“Our business is in a difficult situation and the challenges we face together cannot be overstated. Beyond navigating the current environment, rebuilding our company will require tough decisions and building our competitive edge. We need to make structural changes that will allow us to maintain our value and serve our customers over the long term,” Ortberg wrote in a memo to employees.
The layoffs, which could occur as early as next month, come as Boeing’s labor dispute with the International Association of Machine Manufacturers (IAM) enters its second month. After the union rejected the initial proposal, the two sides have been negotiating through a mediator to reach an agreement. However, no agreement has been reached.
The two sides are not currently negotiating, and Boeing withdrew its latest offer after the IAM refused to vote. The costs of the strikes so far have been significant for both Boeing and the workers, with one industry group estimating the total cost to be nearly $5 billion.
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Boeing will provide more details about the cost of the strike and its impact on its business when it releases its full third-quarter financial results on October 23.
Pras Subramanian is a reporter for Yahoo Finance. you can follow him Twitter And also on Instagram.
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