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November 4, 2024
Boeing

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The key news surrounding Boeing today is the company’s move to raise $19 billion in a share issue to shore up liquidity and maintain an investment grade credit rating.  The no vote that resulted in a continuation of the IAM strike last week underscored the need for liquidity at Boeing, as a potential downgrade from the rating agencies was looming.  This $19 billion raise, combined with a previous $10 billion line of credit, will provide Boeing the liquidity to withstand the impacts of the strike a bit longer – but certainly not indefinitely given the lack of aircraft production and cash flow drain, as well as deleterious impacts on the supply chain.

Boeing itself stated that the strike is an existential threat in its stock prospectus for the capital raise.  The company can ill afford the strike to continue through the end of the year, as it is now impacting the supply chain, which could constrain Boeing’s ability to quickly re-ramp production once the strike ends.  Furloughs have begun at several suppliers, including 700 at Spirit AeroSystems which provides 737 MAX fuselages.  

In good news, LATAM Airlines Group has ordered an additional 10 Boeing 787 Dreamliners plus 5 options for its operations.  Increases to beleaguered Boeing’s backlog are especially important during the strike.  LATAM now is planning for 52 787s in its fleet by 2030.

Southwest’s CEO Bob Jordan indicated that the carrier may receive only 20 of the 80 Boeing aircraft expected in 2024, and that it will have a major impact on the carrier.  At the same time, he urged Boeing to ‘remain strong’ amid its delivery shortfalls, while emphasizing that an airline’s schedule, the backbone of its planning, requires aircraft being delivered on time.

Finally, analysts indicate that the rumored sale of Boeing’s space division could bring the company a $1.2-$1.3 billion windfall.  That would enable Boeing to focus on its core business of building aircraft, while eliminating underperforming assets and cost overruns on fixed price contracts.  The embarrassment of the Starliner failure, stranding astronauts at the International Space Station to be rescued by a competitor, may have sealed that division’s fate as Boeing begins to implement new CEO Kelly Ortberg’s strategic vision of simplifying operations.

Links to today’s key news stories follow:

  • Boeing launches $19 billion share offering to thwart downgrade – BNN Bloomberg
  • The Boeing strike is an existential threat, Boeing says – Quartz
  • 700 Spirit AeroSystems workers begin 3-week furlough – KWCH
  • Boeing workers’ demand for reinstated pension a long shot, experts say – Yahoo
  • LATAM Airlines group orders 15 Boeing 787 Dreamliners – Airways
  • Southwest CEO urges Boeing to ‘be strong’ amid delivery challenges – Yahoo
  • Boeing’s rumored space division sale could net a billion dollar windfall, according to analysts – Proactive
author avatar
Ernest Arvai
President AirInsight Group LLC

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