Boeing (BA, Financial) is making urgent efforts to address its financial challenges by raising $21 billion to boost its cash flow. The company recently announced the sale of 112.5 million shares at $143 each, representing nearly an 8% discount from last week's closing price. Additionally, Boeing sold $5 billion in depositary shares, equivalent to one-twentieth of the company's mandatory convertible preferred stock.
According to analysts, Boeing might burn through $4 billion in cash in the fourth quarter, with negative cash flow anticipated to continue in the first half of next year. With traditional borrowing options exhausted, Boeing is in a crucial period of financial survival.
The most pressing risk for Boeing is the ongoing strike by its workers, now in its seventh week. The economic impact of the strike is estimated to reach $9.7 billion, comparable to last year's costly strikes at Detroit's major auto manufacturers. The strike's end date remains uncertain, adding further strain to Boeing's operations.
In addition to financial maneuvers, Boeing is contemplating selling its aerospace division, which handles NASA orders. This plan is in preliminary stages, with no assurance of a sale. Boeing's aerospace projects have faced delays and cost overruns, contributing to a loss of $3.1 billion in the first nine months of this year.
Boeing's struggles are impacting the entire aircraft manufacturing supply chain, including airlines. Southwest Airlines CEO Bob Jordan revealed that Boeing has underdelivered on aircraft, providing only 20 out of the expected 80 planes this year. The strike is anticipated to affect deliveries into the next year. Southwest Airlines, which relies entirely on Boeing aircraft, currently has no plans to purchase from other manufacturers. Similarly, American Airlines' CEO expressed dissatisfaction, noting that Boeing's inefficiencies have persisted for five years.
