A 50-day strike would cost Boeing $3 billion to $3.5 billion in cash and hit revenues by $5.5 billion, according to TD Cowen analysts.
The financial impact of the strike launched Friday at Boeing sites in the northwest of the United States, in particular the factories that assemble the best-selling 737 and 777, threatens the group’s recovery, declared Brian West, the planemaker’s financial director.
“The strike will affect production, deliveries and activities, and it will threaten our recovery,” he said at a conference organized by a bank, adding that it would depend on how long the walkout lasts.
More than 33,000 union members of the planemaker in the Seattle area – out of some 170,000 employees of the group – rejected by 94.6% on Thursday the proposed new collective agreement announced on September 8 and approved by 96% a walkout, which began at midnight. According to analysts at TD Cowen, a 50-day strike would deprive Boeing of $3 billion to $3.5 billion in cash and would have a $5.5 billion impact on turnover.
Disappointment
Boeing management is “disappointed” by the rejection, West said.
“Initially, we were quite delighted: we had reached an unprecedented agreement in principle which was unanimously supported by the management of the IAM-District 751 machinists’ union,” added the group’s financial director.
“But as the days went by, it became very clear (…) that the offer missed the mark with our unionized employees,” he continued, citing a “disconnect” between the union leadership and its members.
Back to the negotiating table
Boeing now wants to return to the negotiating table quickly to “wrap up a deal,” West said, noting that new CEO Kelly Ortberg had visited the affected plants this week to talk directly with workers.
“The strike injects so much uncertainty” that Brian West declined to make any financial forecast for 2024 and 2025, particularly regarding the extent of the loss of the group’s cash. “Our main priority is to focus completely on measures to preserve our cash,” he noted, acknowledging that the situation was “very complex”.
