Boeing is reportedly set to launch a plan, which will help the company raise more than $15 billion to compensate for its losses from the strike, according to a source familiar with the matter.
Boeing had long pondered on the plan as the strike impacted the company’s finances on multiple levels, halting the production of Boeing’s best-selling 737 MAX, 767, and 777 widebodies, leaving supplies reeling from huge losses.
The fundraiser effort will be launched as early as Monday, Reuters reported.
A source revealed that Boeing will generate capital by selling stocks and convertible preferred shares, with the total amount subject to change based on demand. The move follows Boeing’s latest offer to machinists to end the strike.
According to regulatory documents, Boeing may raise $25 billion in debt and stock in response to worries over its investment-grade credit rating.
Last week, Boeing announced that it secured a $10 billion loan from four major banks – Bank of America, Citibank, Goldman Sachs, and JPMorgan Chase– a move that will likely boost its finances to some level.
Boeing’s labor dispute intensified the strike, with the Association of Machinists and Aerospace Workers Local 751 announcing that 64% of its members rejected a contract proposed by Boeing.
Over 33,000 members of the International Association of Machinists (IAM) at Boeing picket locations in Washington state, Oregon, and California have been striking since Sept. 13.
The proposal included increased contributions to employees’ $401k retirement plans, a $7,000 ratification bonus, a reintroduced incentive plan, and a 35% wage increase spread over four years. This includes a $5,000 one-time commitment and employer contributions of up to 12%. However, the offer fell short of restoring the traditional pension plan that was scrapped long ago, which didn’t sit well with employees.
The strike-battered company had, earlier this month, announced plans to redundant approximately 10% of its workforce which constitutes 17,000 employees.
The source told Bloomberg that Boeing is secretly courting potential investors for its upcoming offering. Boeing’s credit rating may drop to junk if it takes on more debt without paying $11 billion owed by 2026.
Boeing faces a crisis after the 737 MAX door panel incident, with increased regulatory scrutiny, production delays, and eroding customer trust.