How Much Cash is Boeing Burning Through? (BA)

Barclays has affirmed its Equalweight rating on Boeing (NYSE:BA), maintaining a price target of $190.00 for the aerospace giant's stock. This comes amid noteworthy financial challenges for Boeing, including a strategy apparently committed to a continuous cash burn until the year 2025 as per CEO Kelly Ortberg's vision.

The projections are indeed sombre, with an estimated $4 billion in free cash flow to be burnt in the fourth quarter, followed by an expected $3-5 billion throughout 2025. Compounding the issue, the company faces the maturity of $12 billion in obligations during 2025-2026, signalling potential tightness in finances if unaddressed.

Barclays analysts, having taken these factors into consideration, speculate that Boeing could be steering towards an equity raise to the tune of $20 billion. This anticipated move is not seen as dependent on the outcome of the International Association of Machinists (IAM) vote, hinting at the depth of financial restructuring that might be needed irrespective of that particular labour dynamic.

In a more granular look at Boeing's performance and expectations, Barclays has adjusted its model following the aerospace company's third-quarter results. The new outlook incorporates reduced expectations for deliveries of Boeing's MAX and 787 aircraft in 2025. It also expects increased cash burn in the 777X and Defense segments of the business.

For the third quarter, Boeing reported a substantial $6 billion loss, with a prime factor being the strike of 33,000 workers who rejected a labor proposal lacking a defined benefit pension plan. Despite these labor and financial setbacks, Boeing stressed its robust backlog and the commitment of its workforce during recent earnings calls. Moreover, the Defense, Space & Security unit of Boeing, despite facing its share of challenges such as cost overruns and certain project-based losses – including those from upgrades to the Air Force One fleet – remains central to the company's broader strategic aims.