According to a report by the Wall Street Journal, Boeing (NYSE:BA) will raise $10 billion of new equity. While appears enough to address the company’s near-term liquidity needs, Wells Fargo (NYSE:WFC) analysts believe its balance sheet “remains stretched.”
The report states that Boeing plans to issue $10 billion in equity, with the flexibility to raise up to $25 billion through equity or debt in the coming years. This includes a potential $4-5 billion in funding for Spirit AeroSystems (NYSE:SPR) in 2025.
Boeing has also secured a new $10 billion credit agreement, adding to its liquidity alongside its existing $10 billion revolving credit facility.
The analysts estimate that, based on this raise, Boeing's cash balance will remain above $15 billion in 2025 and above $10 billion in 2026, despite roughly $8 billion in debt maturing that year.
Following the $10 billion equity raise, they project Boeing’s net debt to be around $35-40 billion, or approximately $55 per share.
But while the move covers near-term liquidity, Wells Fargo analysts believe Boeing’s “remaining debt remains a drag on BA's share performance—paying this down would consume all the free cash flow (FCF) we forecast through the end of the decade.”
Some investors reportedly see this capital raise as a "clearing event" that may lead to a positive movement in Boeing shares, especially since the raise had been widely discussed. However, Wells Fargo analysts caution that recent secondary offerings have led to weaker share performance in the following weeks.
“We would remain cautious into the earnings call next week, which could shed further light on near-term cash burn during the ongoing strike,” they noted.
Meanwhile, Bank of America (NYSE:BAC) analysts expect Boeing to prioritize issuing equity first, which would strengthen its balance sheet in the near term while preserving the option to issue debt later with a reduced risk of a credit downgrade.
They also point out that the $10 billion supplemental credit agreement includes escalators that "could increase the borrowing rate up to 62.5bps depending on Boeing’s credit rating."