Washington, Sep 14 (UNI) More than 30,000 manufacturing employees of Boeing laid down their tools on Friday in the first strike in 16 years, landing the company that is already wallowing in $60 billion debt and multiple safety issues into a deeper crisis.
Boeing shares hit a near two-year low as Fitch Ratings warned of a possible downgrade of the company’s credit status in the event of an extended workers’ strike.
Boeing’s stock, a proxy of its credit standing, ended down almost 4% on the day and 40% on the year, at just below $157 per share. Earlier on Friday, it fell to $155.60 — its lowest since a November 2022 bottom of $141.54.
Fitch cautioned that if the strike dragged on with no conclusion in sight, Boeing may have to access new liquidity sources to adhere to its cash targets. That could bring more strain on a company that has already lost $8 billion this year.
Boeing CFO Brian West acknowledged that a prolonged strike could jeopardize recovery, impact production and deliveries at the company. The company’s goal of producing up to 38 aircraft per month by the end of the year might take longer, West said.
Boeing has orders for more than 5,500 airplanes but production is below expectation due to manufacturing issues and labor shortages. There are about 70 aircraft in the company’s inventory now.
West said longer work disruption could end up “broadly impacting the industry.”
Boeing is an important part of the US economy, employing almost 150,000 people and is also one of the country’s largest exporters of passenger airplanes and military jets, but it also produces rockets and spacecraft.
Boeing workers at the company’s plants in Seattle and Oregon have gathered since midnight after Thursday. Earlier, an overwhelming 95% of Boeing employees belonging to the International Association of Machinists and Aerospace Workers (IAM) union voted to strike and demand a 40% pay raise that has been resisted by management.
The Biden administration said it was trying to help the two sides reach an agreement.
“Administration officials are indeed in touch with Boeing and the machinists,” White House spokesperson Karine Jean-Pierre said. “We encourage them to negotiate in good faith and work towards an agreement that gives employees benefits that they deserve.”
Boeing had originally offered its machinists a wage increase of 25% over a four-year period that would have raised compensation by up to $4,160 per worker, under the company’s 401(k) pension plan. The company had also agreed to cover more of their health care costs, provide 12 weeks of paid parental leave and make improvements to work-life balance, including reductions in mandatory overtime.
However, the company said it was now trying to up the offer.
“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members,” the company said on its website. “We remain committed to resetting our relationship with our employees and the union and we are ready to get back to the table to reach a new agreement.”
The last strike at Boeing in 2008 lasted more than 50 days and incurred the company an estimated loss of $3 billion.
Jefferies aerospace analyst Sheila Kahyaoglu had previously estimated that a 30-day strike could be a $1.5 billion hit for Boeing.
In 2019, two 737 MAX 8 crashes in Indonesia and Ethiopia in October 2018 and March 2019 killed a combined 346 people, resulting in a temporary global grounding of the jets. Boeing announced then that it would compensate families and communities impacted by the fatal crashes by payouts totaling $100 million.
The woes have continued this year after the door on one of its 737 MAX jets flown by Alaska Airlines blew out mid-flight on January 5. None of the people, including 171 passengers, were hurt and the plane made an emergency landing in Portland, in the US state of Oregon. Then, on August 28, a tire unexpectedly exploded on a Boeing 757 jet operated by Delta Air Lines at Atlanta’s airport, killing two workers and seriously injuring a third.
