Union members hold strike signs during a press conference following the vote count on the union contract at the main union hall of IAM District 751 in Seattle, Washington, USA, Thursday, September 12, 2024.
M. Scott Brauer | Bloomberg |
Boeing Chief Financial Officer Brian West said the strike, which began shortly after midnight on Friday, would impact aircraft deliveries and “jeopardize” the company's recovery, just hours after factory workers overwhelmingly rejected a new collective agreement and walked off the job.
West said the financial impact of the strike would depend on its duration, but it would affect production of the company's best-selling planes, including the best-selling cash cow 737 Max, which is produced in Renton, Washington.
“The strike will impact production, deliveries and our operations and will jeopardize our recovery,” West said at a Morgan Stanley conference on Friday. “So our immediate focus is on cash conservation measures, and that's what we're going to do.”
He said Boeing's priority is to return to the negotiating table and “reach an agreement that is good for our people, their families and our community.”
Boeing shares fell sharply on Friday after Moody's considered downgrading all of Boeing's credit ratings and Fitch Ratings said a prolonged strike could expose Boeing to a downgrade, actions that could further increase the already indebted company's borrowing costs.
Boeing's stock price fell nearly 4% as of 1:20 p.m. ET on Friday.
West declined to comment on whether the company could reach the production rate of 38 737 Max aircraft per month by the end of the year.
Jefferies aerospace analyst Sheila Kahyaoglu had previously estimated that a 30-day strike could cost Boeing $1.5 billion.
West said Boeing would initially focus on “cash conservation measures,” adding that new CEO Kelly Ortberg would work to restore relations with the union.
Boeing and the International Association of Machinists and Aerospace Workers unveiled a tentative collective bargaining agreement on Sunday that calls for wage increases of 25 percent over four years and other improvements in health and pension benefits. But workers had demanded a 40 percent increase, arguing that it would not cover the increased cost of living.
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94.6% of workers in the Seattle area and Oregon rejected the proposal and 96% favored a strike.
They stopped working after midnight on Friday.
The last strike by Boeing engineers took place in 2008 and lasted almost two months.
The potential production disruption comes as the manufacturer faces a series of problems as it struggles to ramp up production and restore its reputation following safety crises.
A blown door stopper on a nearly new Boeing 737 Max 9 in January prompted the Federal Aviation Administration (FAA) to prohibit Boeing from increasing production of its Max planes and ordered it to increase inspections at manufacturing plants until the regulator is satisfied with safety and quality procedures there.
An FAA spokeswoman told CNBC on Friday that the agency would keep its inspectors at Boeing facilities during the strike.
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