Boeing, which has booked net losses every year from 2019 on, totaling nearly $32 billion, and which has borrowed huge amounts of money over those years, bringing its short and long-term debt to $58 billion while gutting its stockholder equity, now a negative $23.6 billion, has been in dire need of lots of cash to burn, after it wasted and incinerated $64 billion in cash on share buybacks to pump up its shares.
The company’s infamous pivot from aircraft engineering to financial engineering to please Wall Street has turned into a devastating mess, including for shareholders. Wall Street loved it at the time, and the shares soared by 500% between 2013 and the peak in early 2019. But since then, shares plunged and have given up most of the gain, and are back where they’d first been 11 years ago.
So today, after days of rumors about a share offering, Boeing announced a huge stock offering that will undo some of the devastation that the share buybacks wreaked upon its balance sheet, and it will dilute the bejesus out of current shareholders.
If you brought in a Mitt Romney-style Private Equity firm to “fix” Boeing, they’d load it up with debt, too, in addition to siphoning off massive management fees.
Selling it from the treasury, are you nuts? That would lower the book value of the company and threaten executive compensation. They are making up the stock out of thin air! They can raise an enormous amount of money without costing the company a dime.
This is a complete screw job for existing shareholders, but that’s not the concern here. A little “refresh” of RSUs and the execs are protected.
Treasury stock is shown as negative equity. Selling from Treasury would reduce negative equity. The other effects, from selling it for less than they paid, would be interesting. I’m now sure how accounting would handle that, as, when I was in B-school, a company as thoroughly looted and gutted as Boeing, would have gone to bankruptcy long before now.
Seems like the Treasury shares average $123. Close today was $154.29, up for the day, probably on the prospect of the company not collapsing into a stinking pile of poo, quite as soon. Depending on if they use LIFO or FIFO accounting, they might be able to claim they made a profit on the shares. So the accounting would be umpteen million share reduction in negative equity, at cost, with the sale total net gain as “additional paid in capital”, on the equity side, and cash on the asset side…I think that balances.
This from Wiki is telling. When regional control is at a distance things go terribly wrong. Especially if regional was the one to try and get out of town.
Ortberg became a member of Boeing’s board of directors after becoming its president and CEO on August 8, 2024.[7] Ortberg has chosen to be based in the Seattle area, where the company’s main commercial aircraft assembly plants are located. His decision comes more than two decades after Boeing leadership decided to move company headquarters out of Seattle.[14]
That is encouraging. He is also not the Chairman of the BoD. The Chair is a former Qualcomm honcho. How long would it take to reverse twenty years of Welchist rot?
