Boeing CEO dismisses concept that firm will flip to an enormous inventory sale to knock down debt

Boeing CEO David Calhoun on CNBC Wednesday shot down hypothesis that the corporate might flip to an enormous inventory sale to knock off debt from its steadiness sheet.

In a observe Tuesday, Morgan Stanley stated that the airplane producer might increase between $20 billion and $30 billion, an evaluation that comes almost two weeks after Boeing’s finance chief stated it could take into account any alternative, together with fairness, to scale back debt on the steadiness sheet. Morgan Stanley stated that might dilute excellent shares by as much as 20%.

Calhoun balked on the notion, suggesting to Jim Cramer that it was a non-starter.

“It is greater than slightly speculative, let me say that,” he stated in a “Mad Cash” interview. “Unsure how or why they did it and it isn’t in our plans to go down that path, so most likely not rather more to say than that.”

Boeing had about $61 billion of debt and $27 billion of money readily available on the finish of September. Calhoun, who took over as Boeing chief in January, beforehand projected that it could take years for the corporate to return its steadiness sheet to ranges previous to each the coronavirus pandemic and 737 Max disaster.

The highest-selling 737 Max airplane, which final month was cleared by federal authorities to fly once more after being grounded for nearly two years, is an enormous driver of money circulate for Boeing. The corporate burned plenty of money responding to investigations within the 737 Max, which was concerned in two lethal aircraft crashes.

Boeing spent $5.1 billion within the third quarter, which was down from the $5.6 billion it burned within the second quarter.

Regardless of the corporate’s ongoing struggles, shares have greater than doubled from the coronavirus sell-off earlier this yr, although the inventory stays down greater than 30% yr up to now.

Based on Morgan Stanley, the inventory’s progress is an indication that Boeing might scale back its debt obligations and handle long-term strategic challenges.

Boeing shares slipped 1.5% on Wednesday, closing at $225.87.

Disclosure: Cramer’s charitable belief owns shares of Boeing.