Boeing Raises $21 Billion in One of the Largest Ever Public Share Sales
Boeing Secures $21 Billion in a Massive Capital Raise to Navigate Financial Strains and Ramp Up Production
Editorial Team (ET)May 9, 2025
Boeing Co. has taken a decisive step in stabilizing its financial position by raising $21 billion in an upsized share sale. This capital hike, one of the largest ever by a public company, comes at a crucial time for the aerospace giant as it navigates a challenging period marked by production setbacks, cash flow issues, and labor unrest. The infusion of capital is expected to support Boeing’s long-term objectives, including maintaining its investment-grade rating and preparing for the resumption of key manufacturing operations once a debilitating worker strike comes to an end.
The Capital Raise: A Lifeline for Boeing
Boeing’s successful $21 billion capital raise includes the sale of 112.5 million common shares, priced at $143 each, representing a 7.7% discount from its previous Friday closing price of $155.01. Additionally, Boeing sold $5 billion worth of depositary shares, each representing a 1/20th stake in mandatory convertible preferred shares.
This financial move was critical for Boeing, whose cash flow has been severely impacted by ongoing disruptions in its production lines, most notably in the 737 Max assembly. With the company on track to burn through around $14 billion in cash by the end of the year, the capital raise will provide Boeing with the liquidity it needs to weather this storm and set the stage for future growth.
Why the Capital Raise Was Necessary
Boeing’s balance sheet has faced significant pressure over the past few years due to several factors, including the global grounding of its 737 Max fleet and the ongoing COVID-19 pandemic, which dramatically reduced demand for air travel. Adding to these challenges, the company is currently in the seventh week of a worker strike that has crippled production at several key facilities.
The cash infusion from this capital raise will not only provide short-term relief but also allow Boeing to shore up its balance sheet as it seeks to ramp up production once the strike ends.
One of the primary objectives behind this capital raise was to ensure Boeing could maintain its investment-grade rating, which is critical for the company to access low-cost financing. With mounting debt and dwindling cash reserves, the capital markets had begun to cast doubt on Boeing’s ability to sustain its rating. By raising $21 billion, Boeing has taken a significant step in securing its financial stability and ensuring access to necessary capital at favorable terms.
Impact of the Worker Strike
The timing of Boeing’s capital raise comes as the company grapples with an ongoing worker strike in Seattle, its first major labor stoppage since 2008. The strike, which began in mid-September, has put additional strain on Boeing’s manufacturing capacity, particularly for its 737 Max jetliner, which had already been plagued by production delays and regulatory scrutiny.
The strike has severely disrupted Boeing’s production pipeline, with the company expected to burn through around $4 billion in cash during the fourth quarter alone. This would bring Boeing’s total free-cash outflow for the year to an estimated $14 billion, further straining its financial position. As the strike drags on, Boeing will likely continue burning cash until it can reach an agreement with the workers and restart its assembly lines.
Adding to the company’s woes, Boeing’s factory workers recently voted to reject the company’s latest contract offer, which included a proposed 35% wage increase spread over four years. The rejection signals continued tension between Boeing’s management and its labor force, with no clear end in sight for the strike. In response, Boeing announced plans to cut its workforce by approximately 10%, a move that could further complicate its recovery efforts once the strike concludes.
Boeing’s Future Outlook
While Boeing has secured much-needed liquidity through its recent capital raise, the company still faces a challenging road ahead. CEO Kelly Ortberg has made it clear that Boeing’s recovery will be a gradual process, with the company likely to continue burning cash well into 2025 as it works to restore full production capacity.
Once the worker strike is resolved, Boeing plans to ramp up production of its flagship 737 Max jetliner, which remains a key component of its long-term strategy. The company is counting on a recovery in air travel demand to drive orders for the 737 Max, as airlines look to modernize their fleets with more fuel-efficient aircraft.
In addition to its production goals, Boeing is also exploring ways to streamline its operations and reduce costs. CEO Ortberg has launched a review of the company’s broad portfolio of businesses, with an eye toward exiting non-core ventures and focusing resources on its most profitable divisions. One such division under review is Boeing’s troubled Starliner space capsule program, which has faced numerous delays and cost overruns.
Market Reaction
Following the announcement of the capital raise, Boeing’s shares dropped 2.8% to close at $150.69 on Monday, reflecting investor concerns about the ongoing worker strike and the company’s longer-term financial outlook. The stock has declined approximately 42% so far this year, making it one of the worst-performing stocks in the Dow Jones Industrial Average. Despite the stock’s underperformance, Boeing’s leadership remains optimistic that the company will be able to turn the corner once the strike is resolved and production ramps up. The capital raise is seen as a critical step in stabilizing the company’s finances and positioning it for future growth.
Boeing’s Cash Burn Expected to Continue
As Boeing works to restart its factories, the company has acknowledged that it expects to continue burning cash through at least the first half of next year. However, with the new capital in hand and a separate $10 billion credit agreement providing additional short-term liquidity, Boeing is confident it can navigate the challenges ahead.
The Role of Underwriters in Boeing’s Capital Raise
Boeing’s massive capital raise was led by a consortium of major financial institutions, including Goldman Sachs, Bank of America, Citigroup, and JPMorgan Chase. These underwriters played a crucial role in securing the $21 billion in funding, helping Boeing tap into capital markets at a time when investor sentiment was somewhat uncertain.
In addition to the common shares and depositary shares sold in the initial offering, the underwriters have the option to sell an additional 16.9 million common shares and $750 million in depositary shares. This could provide Boeing with even more liquidity as it works to stabilize its financial position.
Conclusion
Boeing’s $21 billion capital raise represents a significant milestone for the company as it works to regain its footing following years of turmoil. While the company still faces significant challenges, including ongoing labor unrest and cash flow issues, the infusion of capital will provide much-needed stability as Boeing looks to the future. With a clear path forward and the resources to weather the storm, Boeing is poised to emerge stronger in the years ahead.
