Boeing aims to raise up to $35 billion to fight major crisis | Companies

Boeing’s new CEO, Kelly Ortberg, wants to take the bull by the horns of the airline company’s deep crisis. Days after announcing the layoffs of 17,000 employees, 10% of the workforce, and despite a strike that made the situation even worse, the company launched a plan to address its delicate financial situation. The company notified the US Securities and Exchange Commission (SEC) on Tuesday that it had signed a $10 billion (about 9,200 million euro) loan and filed a prospectus for offering shares, convertible debt and other securities for an additional fee. 25 billion dollars.

“These are two prudent steps to support the company’s access to liquidity,” the company said in a statement. In announcing the layoffs, abandonment of some projects and delays in others, Ortberg expected he was working to achieve the “necessary balance” for investment and results for employees and clients.

Boeing has signed a $10 billion loan agreement with Wall Street majors BofA, Citibank, Goldman Sachs and JPMorgan. The company has 120 days to take advantage of the new loan. The agreement includes provisions that limit Boeing’s ability to incur consolidated debt in excess of 60% of the company’s total capital. It also contains prepayment assumptions that require Boeing to cancel outstanding advances or reduce obligations early if Boeing incurs debt, issues equity or sells assets under certain assumptions.

For its part, with regard to the capital increase prospectus, it allows for various issues of shares, bonds, subordinated debentures, convertible debentures and other securities amounting to up to $25 billion. “This universal registration gives the company the flexibility to use the various capital options needed to support the company’s balance sheet over a three-year period,” Boeing said in a statement.

According to “Wall Street Journal” The Company intends to initially use the prospectus to fund a $10 billion capital increase. Boeing is worth about $92 billion on the stock market, so depending on the terms and conditions of the offering, this could represent a capital increase of more than 10%. If the placement goes ahead, it will be the largest by a listed company since Saudi Arabian Oil floated $12.3 billion in June.

Boeing states in the prospectus that it will use the funds “for general corporate purposes,” which could include, but are not limited to, debt repayment, working capital, capital expenditures and financing, and investments in subsidiaries.

Last week, the company announced that it ended the third quarter with a cash position and investments in marketable securities of $10.5 billion, a critical position given the paralysis of production due to the strike it endured for a month due to… for the lack of agreement with the majority trade union of the company regarding a new collective agreement.

Heavy losses

Last week, Boeing warned it would close the third quarter with a loss of $9.97 per share, putting the company as a whole at a red-hot figure of about $6.1 billion for the three months. In the first half of the year, the company lost about $1.8 billion. The company closed last year with losses of $2.222 million (about 2.050 million euros). While these are red numbers, they amount to less than half of the previous year’s $4.935 million loss. The company already suffered a loss of $636 million in 2019, which worsened to a record $11.873 million in 2020. It then lost 4.202 million in 2021. The accumulated red figures for the last five years add up to about $23,800 million and are on track to exceed $30,000 million adding to this year.

The labor dispute is the latest setback in a dark year for Boeing that began with a freak accident in January when an Alaska Airlines plane lost an in-flight panel that covered an opening intended for an escape door in other plane configurations. aircraft model, 737 Max. This forced the company to slow down production to fix problems in the production process. In addition, a scathing report commissioned by US regulators and published in February questioned Boeing’s “safety culture”, a new blow for the US commercial aircraft maker. Previous President and CEO Dave Calhoum announced his resignation in March.

The Alaska Airlines incident, while not catastrophic, once again put Boeing and its 737 Max at hurricane risk after its flight clearance was revoked in 2019 following two fatal crashes that killed more than 300 people in 2019. another other option. . In October 2018, the plane crashed in the Java Sea, Indonesia. Low-cost Lion Air’s 610, operated by the 737 Max 8; A few months later, in March 2019, 157 people died on Ethiopian Airlines Flight 302 in the worst air disaster of that year, which also involved a Boeing 737-8. After those accidents, the company was unable to correct its course.