With the freshly-appointed captain of the world’s second-largest planemaker struggling to pull the company out of a nosedive, a US labor official flew to Seattle yesterday to try and help put out one of Boeing’s many fires: a massive factory strike.
Gridlocked: On Sunday, 33,000 unionized workers marked one month of picketing for better pay, a strike that has brought production of the company’s 737s to a standstill and has cost Boeing, its suppliers and customers, and Seattle-area businesses a collective $5 billion, according to Anderson Economic Group. The Acting Labor Secretary urged both sides to find a compromise following a long weekend of worsening outlooks.
After you logged off early markets closed on Friday, Boeing CEO Kelly Ortberg announced:
- The company is expecting to incur $5 billion in extra expenses related to its commercial and defense business this quarter.
- It will cut 17,000 jobs in the “coming months,” a 10% layoff that will affect executives, managers, and factory workers.
- The long-awaited 777X craft is being delayed another year to 2026. That really peeved one of its largest customers, Emirates, which ordered almost half of the total delivery and will now be having “a serious conversation” with Boeing, the airline’s CEO said.
And the strike shows no signs of slowing. Union leaders say picketers—who get $250/week from the strike fund in lieu of paychecks and health insurance—know they’re in this for the “long haul,” and have been saving up money to prepare. Every month the strike persists could cost Boeing another $1 billion, per S&P Global Ratings.
Bank of America aerospace analyst Ron Epstein called Boeing’s current predicament a “continuous doom loop cycle” caused by a cascade of problems across “quality, labor relations, program execution and cash burn.”
Looking ahead…Ortberg makes his first earnings call as CEO on October 23. He’ll try to put investors at ease over the company’s stock, which is down 40% this year since the door plug blowout heard ‘round the world.—ML