American aircraft manufacturer Boeing, which is experiencing the greatest crisis since its founding due to a series of aircraft defects and labor union strikes, is planning to raise up to $35 billion (approximately 47.775 trillion KRW) in capital.
On the 15th (local time), Boeing announced in a filing submitted to the U.S. Securities and Exchange Commission (SEC) that it plans to raise $25 billion (approximately 34.125 trillion KRW) through future stock and bond issuance. Additionally, it has signed a credit loan agreement with financial institutions including Goldman Sachs and Citibank for up to $10 billion (approximately 13.65 trillion KRW). Boeing explained, "We have secured the flexibility to explore various capital options as needed to support the company's balance sheet over the next three years."
Once boasting the world's number one position with overwhelming sales, Boeing is now facing its greatest crisis since its founding due to aircraft defect safety incidents continuing from the beginning of the year combined with the first strike in 16 years. Since the strike began on the 13th of last month, production lines for aircraft such as the 737 Max, 767, and 777 have come to a halt, with losses estimated to exceed $1 billion so far. The net loss per share is also expected to widen from $2.9 in the second quarter to $9.97 in the third quarter.
Concerns about Boeing's business creditworthiness have also intensified. Last week, S&P Global Ratings warned that it might downgrade Boeing's credit rating to speculative grade. Consequently, analyses inside and outside Wall Street have suggested that at least $10 billion in capital raising is necessary to maintain an investment-grade rating. On the 11th, Boeing also unveiled a restructuring plan targeting 10% of its total workforce.
Wall Street has given a generally positive evaluation of Boeing's capital raising efforts. Credit rating agency Fitch described it as "a measure to increase financial flexibility and alleviate short-term liquidity concerns amid prolonged strikes and ongoing operational issues." One bondholder said, "It is a wise strategy by management," adding, "While negotiating with the (striking) union, they have found a bridging role to assure the market that there are no short-term concerns." Ben Chocanos, Director of S&P's Aerospace Sector, commented, "Boeing has bought time." On this day, Boeing's stock closed up 2.26% compared to the previous session on the New York Stock Exchange.
However, there are also repeated points that the fundamental problems surrounding Boeing have not been resolved. Nick Cunningham, an analyst at Agency Partners, pointed out the ambiguity and breadth of the disclosure, emphasizing that the situation actually requires temporary cash acquisition. Another bondholder expressed concern about the prolonged strike, saying, "The problem with the supply chain is that once you turn it off, it is very difficult to turn it back on. We do not know how much cash will be needed." As of the end of the second quarter, Boeing's debt stood at $58 billion. Boeing is scheduled to release its third-quarter earnings on the 23rd.
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