We've written extensively about Boeing in recent months, assuming that the latest developments would not be the last. We've recounted the stock's curious and relative resilience, and that hyper-capitalized businesses often end up in trouble when management is no longer up to scratch. Since then, we've had the social arm wrestling with employees demanding their due after the industrialist spent 45 billion dollars of cash on share buybacks over the last ten years, money that would clearly have been better spent on industrial facilities and quality control.

The industrial dispute has compounded the backlog of customer deliveries. In the commercial division, Boeing was only able to ship 291 aircraft in nine months. If the Group delivers as many aircraft in Q4 as in Q3, it will end the year at around 410 deliveries, compared with 528 in 2023. That's half the 806 of 2018, the best year in its history to date. At the same time, the company continues to lose money in its defense branch, due to cost overruns on certain major programs.

These upheavals naturally exacerbate the Group's difficulties, by complicating the inflow and outflow of cash. Which begs the question: what are the consequences of the deteriorating balance sheet?

Last night, S&P Global Ratings placed Boeing's credit rating on watch with negative implications. As the group is rated "BBB-", the lowest level of the investment grade, a downgrade would automatically downgrade the debt to speculative grade, which would increase financing costs and exclude Boeing from certain lenders anxious to deal only with investment grade players.

S&P believes that the current strike could result in a cash outflow of around $10 billion in 2024, partly due to the build-up of working capital requirements to support the recovery, and partly due to the costs associated with the strike. In any case, the harsh social conflict is jeopardizing several objectives, notably the ramp-up of monthly B737MAX production to 38 aircraft by the end of the year, and the return to positive free cash flow next year.

As a result, Boeing will probably have to raise funds to avoid worsening its already stretched ratios. S&P believes that the group could launch a capital increase. Reuters reported last night on rumors of a share issue or convertible bond issue currently under consideration. It could be for $10 billion (for a current capitalization of $95 billion).

Boeing is too big and too strategic to fail. This partly explains its limited stock market downgrading, despite earnings-to-debt ratios that would make any normally constituted investor run for cover. Despite the calamities, the Boeing signature still has value, and there is little doubt that a capital increase will meet with an audience, or even that the credit market will welcome a bond issue. Washington may also act less directly, by releasing a large defense contract for example. "An order from the US government is very good collateral for convincing credit investors", says an industry insider.

However, Boeing's ability to raise funds against all odds does not mean it is a good deal for shareholders. Without even mentioning dilution, the group will have to solve major industrial problems and prove its ability to get back into the civil aviation race, with innovative, high-performance models. This will be no mean challenge.