Boeing Secures $3.8 Billion Credit Facilities from Leading Lenders Citibank and JPMorgan

A recent filing with the United States Securities and Exchange Commission (SEC) has revealed that Boeing, the renowned aircraft manufacturer, has successfully secured credit facilities totaling $3.8 billion through separate agreements with Citibank and JPMorgan.

The first agreement, a revolving credit facility of $800 million with a term of 364 days, features Citibank and JPMorgan as joint lead arrangers and joint book managers. These banks also hold roles as administrative agent and syndication agent respectively. This new arrangement replaces Boeing’s prior $5.8 billion 364-day revolving credit agreement, which was slated to conclude on August 24, 2023.

Boeing’s payment structure for this agreement includes an annual fee ranging from 0.125% to 0.3%, contingent upon Boeing’s credit rating. Borrowings tied to the Secured Overnight Financing Rate (SOFR) will accrue interest at an annual rate determined by Adjusted Term SOFR (as defined in the agreement), ranging from 1.250% to 1.7% per annum, again dependent on Boeing’s credit rating.

While the initial term of the $800 million agreement is set to expire on August 22, 2024, Boeing retains the option to extend it for an additional 364 days.

The second credit agreement, amounting to $3 billion and also revolving in nature, follows a comparable structure. Citibank and JPMorgan remain the key lenders, with commitment fees ranging from 0.175% to 0.35%, linked to Boeing’s credit rating. This agreement distinguishes itself from the previous one by featuring a five-year maturity date, concluding on August 24, 2028. Similar to the first agreement, Boeing possesses the right to extend this term by one additional year on each anniversary of the closing.

Boeing emphasized the ongoing effect of its three-year revolving credit agreement from August 25, 2022 (total commitments of $3.0 billion) and its amended five-year revolving credit agreement from October 30, 2019 (total commitments of $3.2 billion), both highlighted in the SEC filing.

As of Q2 2023, Boeing’s consolidated debt stood at $52.3 billion, indicating a reduction from Q1 2023’s $55.4 billion. Notably, credit rating agencies S&P, Moody’s, and Fitch have assigned BBB-, Baa2, and BBB- ratings respectively to Boeing.

David Calhoun, the President and Chief Executive Officer (CEO) of Boeing, expressed optimism about the company’s operational and financial outlook during the Q2 2023 earnings call. He remarked on positive indicators including projected free cash flow and delivery ranges for 2023 and the subsequent years.

However, the company faces a potential challenge due to new manufacturing issues impacting the Boeing 737 MAX and the P-8 Poseidon, which could influence delivery numbers for 2023, thus affecting commercial aircraft revenues and overall cash flow.

In Q2 2023, Boeing garnered a total revenue of $19.8 billion, with a significant portion, $8.8 billion, attributed to Boeing Commercial Airplanes. Notably, this segment achieved deliveries of 136 aircraft during the quarter, including 103 from the 737 MAX/P-8 Poseidon programs.