Boeing is expected to raise $10-12bn by the end of the year, Bank of America analyst Ronald J. Epstein said in a report on October 2, 2024.
The analyst also surmised the ongoing strike with Boeing's machinist workers in Portland and Seattle is costing the company around $50 million per day. The strike could cost $1bn per month if it were to stretch that far. If it were to go on longer, the cash burn could compound - largely dependent on how much Boeing is saving through its staff furloughs, supplier order freezes, layoffs, and other measures.
"However, the greater impact comes from how long it takes to get back up to speed," said Epstein. "In normal times, the rule of thumb in the aerospace industry is one month of disruption equals one year to go back to production levels."
But these are not normal times for Boeing what with its quality control issues and Federal Aviation Administration (FAA) imposed production cap on its 737 jets. "The impact could be further extended," the analyst added.
Epstein likened Boeing's grapple with its issues to Hercules' battle with the Hydra.
"For every problem that comes to a head, then severed, more problems sprout up," he said. "We see this in the union strike, production ramp cap, systemic quality control issues, ongoing cash burn, and the need for another potential capital raise. The issues all feed into each other creating a continuous doom loop while compounding the negative impacts."
The capital raise is expected to cover around $3-5bn of free cash flow burn in the second half of the year - depending on the length of the strike - as well as $4.3bn of 2025 maturities and almost $8bn of first half 2026 maturities.
Despite this, the analyst reiterated its neutral rating as "the Odyssey unfolds" with it citing Boeing's strong position in a "long-cycle industry" and "remains the beneficiary of a duopoly" in the OEM manufacturing sphere.
Boeing will publish its third quarter results on October 23, 2024, and will mark new CEO Kelly Ortberg's first earnings call with the company. It is likely to be one of the most unreservedly interesting first results call for any CEO.