108-year-old aerospace giant acting like a struggling startup as debts and losses soar
Beleaguered Boeing is hoping millions of new shares and billions of dollars in convertible securities can stave off a credit downgrade as it leaks cash during an ongoing strike.plans to sell 90 million new shares and $5 billion in depositary shares that will mature into common stock in 2027.
"If the current strike lasts a week or two, it is unlikely to pressure the rating," Fitch said."However, an extended strike could have a meaningful operational and financial impact, increasing the risk of a downgrade.""Our ratings case forecasts do not assume an operationally disruptive labor action but do account for union-linked labor cost increases under new contracts," Fitch added.
What was Boeing through their heads? Emails show staff wouldn't put their families on a 737 Max over safety fearsMoody's has placed Boeing on review for a possible downgrade to junk status, and S&P has placed Boeing on a watch list as well, both firmssaid it would downgrade Boeing if the company's cash balance slipped below $10 billion, and that red line is close: Boeing said in its Q3 statement that it had $10.5 billion cash on hand, down $2.1 billion from the previous quarter..
To stave off that downgrade, all three firms reckon Boeing needs to raise cash, and that's just what the company is doing with this latest move. Boeing said it intends to use funds raised, in part, to repay its debts. Whether the matter will appease shareholders and credit agencies in unclear, however, Boeing shares have tipped downward slightly in pre-market trading since the funding round was announced. ®"Fitch continues to evaluate the company's ability to resolve its labor negotiations, regain operational momentum, and adhere to our negative rating sensitivity," the credit agency said.
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