By Scott Hamilton

Sept. 23, 2024, © Leeham News: A Wells Fargo analyst calculated The Boeing Co. might have to issue 190 million shares of stock to get itself out of the financial mess it’s in.

At the $155 range Boeing’s stock has been recently trading, which would be just shy of $30bn.

Last week, Barron’s (a financial publication) wrote that Boeing has too much debt and perhaps a $10bn equity offering would suffice.

The Wells Fargo analyst and Barron’s complained that issuing stock would hurt shareholders due to the dilution.

On Sept. 12, the day Boeing’s IAM 751 union rejected the Tentative Agreement for a new labor contract and voted to strike at midnight, LNA did a deep dive analysis of the Wells Fargo equity speculation and the increasing speculation that Boeing might be forced into bankruptcy if the strike lasts a long time.

Before that, LNA analyzed the net debt levels, how long it would take to pay it down, and the annual interest to be paid.

Boeing’s financial position is precarious. It needs $10bn in cash to run the company; on June 30, the end of the second quarter, it had $12bn in cash. It’s losing an estimated $100m a day during the strike.

Wall Street types wring their hands over the dilution of a possible stock offering. This begs the question: would they prefer dilution or bankruptcy, which typically wipes out shareholders?

Or would they prefer at least a decade of stagnation while Boeing tries to operationally repair its balance sheet?

LNA welcomes the idea of a $30bn equity offering.

Boeing won’t fully recover without drastic action. And a massive equity offering best fits this need.

Related Stories

• Boeing has too much debt. (Barron’s)
• IAM rejects contract, strikes at midnight
• Boeing’s liabilities problem: a decade to resolve
• Melius analyst report: The Strike is a Symptom of a Bigger Problem