Boeing could lose over USD 100 million in daily revenue amid an ongoing strike by its Seattle-area workforce, analysts cautioned on Monday. The strike, which began last week, involves more than 30,000 unionised workers who rejected their first full contract in 16 years. The affected workers are responsible for assembling Boeing’s popular 737 MAX and other jets at US West Coast facilities.
If the strike persists, it could cost Boeing billions of dollars, further straining the company’s already fragile finances and potentially leading to a downgrade of its credit rating. Northcoast Research estimates that the total financial impact could exceed USD 3 billion, with Boeing possibly removing 33-35 jets from its production schedule. Analyst Chris Olin noted that this would result in a daily revenue loss of approximately USD 102 million.
This labor dispute marks Boeing’s first strike since 2008 and comes amid a challenging year for the company. The year began with a high-profile incident involving a door panel detaching from a new 737 MAX jet mid-flight. Boeing’s shares have plummeted by about 40% so far this year.
New CEO Kelly Ortberg faces the task of managing this labor dispute just weeks after taking the helm. The strike adds to the company’s difficulties, which include heightened scrutiny from US regulators over safety practices. Last week, all three major ratings agencies warned that a prolonged strike could lead to a loss of Boeing’s investment-grade rating, which would escalate borrowing costs for the company, already burdened with USD 60 billion in debt.
TD Cowen analyst Cai von Rumohr estimated that the strike could reduce daily sales by more than the USD 100 million experienced during the 2008 strike, reflecting increased production volumes. Jefferies analysts projected that the strike could lead to a USD 1.3 billion drop in monthly free cash flow.
In response to the strike’s impact, Boeing announced a hiring freeze and is considering temporary furloughs to manage costs. The company’s financial stability is further compromised by negative free cash flow and thin profit margins, underscoring the urgent need for a resolution.