Less than a week after revealing a near $US4 billion cash burn in the first three months of this year, embattled plane maker Boeing is raising $US10 billion in new debt.
Market reports in the US say the company, in confirming the fundraising, acknowledged the credit rating cut by Moody’s last week (and now S&P Global) that positions Boeing near junk status.
Boeing is still struggling with the financial damage from the midair blowout of a cabin panel door plug on a nearly new 737 MAX 9 operated by Alaskan Air in early January. Investors and analysts have suggested Boeing could tap bond markets to address over $12 billion in combined debt maturing in 2025 and 2026.
Credit rating agencies on Monday both assigned ratings nearing junk to Boeing’s new senior unsecured notes, with S&P assigning a BBB- rating and Moody’s assigning a Baa3 rating.
Moody’s stated the rating reflects Boeing’s still-strong business profile, which continues to mitigate ongoing weak performance in commercial aircraft, although headwinds surrounding the division could persist through 2026.
Boeing will utilize the bond proceeds to increase its liquidity ahead of maturities on its existing debt load, including $4.3 billion in 2025, S&P wrote on Monday.
Boeing reported a first-quarter loss of $US355 million, which was better than expected by the market due to improved results in its other two business segments: space and military. The problem lay in its commercial airliner business, which incurred a massive $US1.14 billion loss as aircraft deliveries fell 36% from a year ago to just 83 in the first quarter.
That’s less than a plane a day – significantly less than its past production rates.
The $US4 billion cash burn left it with around $US7 billion in cash on hand and $US10 billion in available credit lines at the end of March. That will rise to more than $US26 billion once the latest raising is complete.
The plane maker has evidently chosen to act early to bolster its finances rather than wait and face less favorable terms from tough financiers.