It was not clear when and how much the planemaker would eventually raise, but analysts estimate Boeing needs somewhere between $10 billion and $15 billion to maintain its credit ratings, which are now just one notch above junk.
The company is looking to shore up its finances with a cash-and-debt raise as it faces the possibility that its credit rating will be lowered after three straight quarters of burning through cash.
The company’s shares were up 2.1% on Tuesday.
“The supplemental credit facility also seems like a sensible precaution,” S&P Global’s Ben Tsocanos said.
However, some analysts were not convinced.
“We take the vagueness and breadth of the shelf announcement and the need for the temporary financing as implying that the banks are struggling to sell this issue to potential investors or lenders,” said Agency Partners analyst Nick Cunningham, who suspended his recommendation and price target for Boeing’s shares.
Boeing said on Tuesday it had not drawn on the new $10 billion credit facility, arranged by BofA, Citibank, Goldman Sachs and JPMorgan, or its existing revolving credit facility.
Item 1 of 3 Boeing 737 MAX aircraft are assembled at the company’s plant in Renton, Washington, U.S. June 25, 2024. Jennifer Buchanan/Pool via REUTERS/File Photo
“These are two prudent steps to support the company’s access to liquidity,” Boeing said, adding that the potential stock and debt offerings will provide options to support its balance sheet over a three-year period.
On Monday, Emirates Airlines President Tim Clark became the first senior industry figure to articulate fears over Boeing’s ability to tackle its worst-ever crisis intact.
Boeing will use the funds for general corporate purposes, according to paperwork filed with the U.S. markets regulator on Tuesday.
The planemaker had cash and cash equivalents of $10.89 billion as of June 30.
MATURING DEBT
The company and the Machinists union, which represents the striking workers in the U.S. Pacific Northwest, are yet to reach an agreement over a new contract and talks have become increasingly heated.
U.S. Acting Labor Secretary Julie Su met with Boeing and the union in Seattle on Monday in a bid to break the deadlock.
The planemaker was already reeling due to a regulator-imposed cap on production of its MAX jets after the mid-air cabin-panel blowout in January.
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Reporting by Abhijith Ganapavaram and Utkarsh Shetti in Bengaluru and Tim Hepher in Paris; Editing by Sriraj Kalluvila, Saumyadeb Chakrabarty and Shounak Dasgupta
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