Boeing is enduring one of its most difficult periods. From the troubled Starliner spacecraft to a major labor strike and aerospace workers, the company is facing severe disruptions that threaten its recovery and future stability.
Recently, rumors circulated about the potential abandonment of its Starliner spacecraft, which recently left two NASA astronauts stranded on the ISS. However, the company’s bigger concern now lies on the ground, with over 30,000 union workers from the International Association of Machinists and Aerospace Workers (IAM) voting to go on strike, rejecting Boeing’s latest contract offer by a large margin
In a memo to employees, Boeing CFO Brian West revealed that the company has responded to the strike by implementing a hiring freeze, reducing non-essential travel, and pausing executive pay raises. West warned that temporary furloughs could soon follow, affecting employees, managers, and executives alike.
“Our business is in a difficult period,” West stated, emphasizing that “this strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.”
This strike adds to Boeing’s existing troubles in its commercial jet business. Earlier this year, a “door plug” failure on a 737 MAX jet mid-flight raised significant safety concerns, prompting intense regulatory scrutiny. Investigations and production slowdowns followed, leaving Boeing struggling to restore its 737 MAX output to pre-incident levels. The strike now threatens to exacerbate these production delays, potentially pushing the company into deeper financial straits.
Boeing has already lost $33 billion since 2019, and further disruptions to its jet programs could be catastrophic.
West’s memo also noted that Boeing has halted the majority of supplier purchase orders for its 737, 767, and 777 programs. Despite the growing crisis, credit rating agencies Fitch and Moody’s have cautioned that Boeing’s credit rating could fall into “junk bond” status, though S&P Global Ratings suggested that the strike won’t immediately impact the rating.
Still, analysts predict that Boeing could lose more than $100 million in daily revenue due to the ongoing strike, with the company’s shares having plummeted roughly 40% since the start of the year.
On the other side of the labor dispute, IAM union workers are receiving just $250 per week from their union’s strike fund, a substantial pay cut that adds further strain to the situation.
“The key question is: How long are they willing to suffer?” noted Tony Bancroft, portfolio manager at Gabelli Funds, highlighted.
