Boeing CEO dismisses idea that company will turn to a massive stock sale to knock down debt

Boeing CEO David Calhoun on CNBC Wednesday spot down speculation that the company could turn to a massive stock sale to knock off debt from its estimate sheet.

In a note Tuesday, Morgan Stanley said that the airplane manufacturer could raise between $20 billion and $30 billion, an assessment that happens nearly two weeks after Boeing’s finance chief said it would consider any opportunity, including equity, to lose weight debt on the balance sheet. Morgan Stanley said that could dilute outstanding shares by up to 20%.

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

“It’s more than a little speculative, let me say that,” he said in a “Mad Money” interview. “Not guaranteed how or why they did it and it’s not in our plans to go down that path, so probably not much more to say than that.”

Boeing had about $61 billion of liable and $27 billion of cash on hand at the end of September. Calhoun, who took over as Boeing chief in January, previously calculated that it would take years for the company to return its balance sheet to levels prior to both the coronavirus pandemic and 737 Max critical time.

The top-selling 737 Max airplane, which last month was cleared by federal authorities to fly again after being found for almost two years, is a big driver of cash flow for Boeing. The company burned a lot of cash responding to investigations in the 737 Max, which was confusing in two deadly plane crashes.

Boeing spent $5.1 billion in the third quarter, which was down from the $5.6 billion it fritter away in the second quarter.

Despite the company’s ongoing struggles, shares have more than doubled from the coronavirus sell-off earlier this year, yet the stock remains down more than 30% year to date.

According to Morgan Stanley, the stock’s evolvement is a sign that Boeing could reduce its debt obligations and address long-term strategic challenges.

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

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