Boeing May Need To Offer Additional Concessions To End Strike Despite Multi-Billion Dollar Debt: BofA Analyst

BofA Securities analyst Ronald J. Epstein reiterated a Neutral rating on Boeing Company BA, with a price forecast of $200.

The analyst views Boeing as particularly vulnerable, noting that the company has delayed its 737 production rate increase from 42 per month, originally set for September 2024, to March 2025.

A prolonged strike could further worsen the company’s current difficulties, Epstein added.

However, if the Spirit AeroSystems strike and subsequent contract negotiations set a precedent, the strike could potentially be resolved in as little as a week, Epstein adds.

The analyst forecasts that Boeing may need to offer additional concessions, possibly approaching the IAM’s original demand for a 40% wage increase.

Also Read: Boeing’s Stock Falls As 33,000 Aircraft Assembly Workers Strike

The analyst highlights that both CEO Kelly Ortberg and COO Stephanie Pope have fired off internal memos to Boeing staff, trying to cool down strike sentiments.

Pope touted the proposed contract as Boeing’s best ever, emphasizing the 25% wage increase despite the company’s hefty $60 billion debt, the analyst highlights.

Meanwhile, Kelly’s memo admitted that Boeing is grappling with a rough patch, partly due to past blunders, and warned that a strike could derail their hard-fought recovery.

According to the analyst, Boeing now has the onus to act, resolve the issues, and prevent additional “disruptions.”

Meanwhile, Boeing shares are trading lower after workers rejected the proposed labor contract, leading to a strike. Moody’s placed the company’s ratings on review for downgrade amid concerns.

According to Benzinga Pro, BA stock has lost 25% in the past year. Investors can gain exposure to the stock via iShares U.S. Aerospace & Defense ETF ITA and Gabelli Commercial Aerospace and Defense ETF GCAD.

Price Action: BA shares are trading lower by 3% to $157.87 at last check Friday.

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