Aerospace company Boeing Co BA has endured a tumultuous 2024, grappling with airplane safety concerns, astronauts stranded in space, and serious contract disputes with union workers.
The company's battle with SpaceX over space contracts may face significant challenges in the coming months and years due to these recent setbacks.
What Happened: Boeing is currently facing a battle with union workers over contract demands, as over 30,000 employees have gone on strike. As a result of the contract disputes, the company has also placed a freeze on hiring and considered furloughs.
The labor battle compounds the company's recent troubles and could provide fuel for rival SpaceX and its CEO Elon Musk in future contracts with space agencies like NASA.
SpaceX has been dominating the space sector for many years and its recently complete space walk could lead to the company landing more deals, especially considering the concerns facing Boeing and its space division.
After several delays, Boeing sent the Starliner to the International Space Station (ISS) on June 5. The Starliner was supposed to return astronauts Butch Wilmore and Suni Williams to Earth on June 14, but the duo remains stuck on the ISS due to complications with the spacecraft.
Ironically, it will be SpaceX that brings the astronauts home next year aboard a SpaceX Dragon capsule.
Musk has often criticized Boeing and other companies that have won larger contracts than SpaceX, despite his space company's leadership and success in the sector.
"Our Dragon spacecraft is the only spacecraft capable of taking any significant cargo down from the Space Station," Musk said back in 2014. "They only take stuff up, they take up less than we do, and they take nothing down, and they get paid twice as much per mission as we do."
The Dragon landed a $2.6 billion contract in 2014 and has made multiple trips to the International Space Station. Boeing was awarded a similar contract in 2014 for ISS travel and the Starliner, but with a higher value of more than $4 billion. The June mission was Boeing's first to the Space Station.
Boeing’s safety concerns, Starliner struggles, and potential labor disruptions from union negotiations may all be factors that NASA and other organizations consider when awarding future contracts. Compare that to SpaceX, which has had successful missions, and Musk's well-known anti-union beliefs, resulting in fewer wage-related issues at his companies over the years.
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Why It's Important: Safety and costs will likely be top priorities for a government agency like NASA when considering a contract winner.
Musk has recently accused the Federal Aviation Administration (FAA) of favoritism towards Boeing as the agency weighs a potential fine on SpaceX. Musk questions why Boeing has not faced fines or pushback over the Starliner stranding two people in space.
Boeing's Defense, Space & Security segment had revenue of $25 billion in 2023 and was its second-largest segment, behind commercial airplanes ($33.9 billion).
For Boeing investors, there could be concerns across multiple divisions as new leadership looks to turn around the commercial airplanes segment after safety concerns and government inquiries. The space segment could also see setbacks thanks in part to its own doing, and also the success of its rival.
BA Price Action: Boeing stock trades at $154.99 versus a 52-week trading range of $151.65 to $267.54. Boeing stock is down 38% year-to-date in 2024.
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