The ongoing strike by Boeing Co. BA machinists has dealt a severe blow to the aerospace giant, with estimated costs reaching nearly $5 billion as the labor dispute enters its second month.
What Happened: Sunday marked 30 days since 33,000 members of the International Association of Machinists walked off the job on Sept. 13, bringing production at the troubled aircraft manufacturer to a near standstill. According to an estimate by Anderson Economic Group, as reported by CNN, the estimated cost of the strike is nearly $5 billion.
The prolonged work stoppage has taken a toll on Boeing’s financial health. The company’s stock price has fallen 4.22% since the strike began, closing at $148.99 on Monday compared to $155.55 a month earlier, according to data from Benzinga Pro.
Boeing’s market capitalization has also suffered, dropping by $4 billion to $91.80 billion, according to Benzinga Pro data.
The multi-billion-dollar impact underscores the challenges facing Boeing, once a symbol of American manufacturing prowess. In recent years, the company has grappled with a series of setbacks, including:
- Fatal crashes involving its 737 MAX aircraft.
- Increased regulatory scrutiny.
- Production delays and quality control issues.
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Why It Matters: The company recently announced a 10% workforce reduction, affecting approximately 17,000 employees, as part of efforts to mitigate financial losses linked to production delays and the ongoing strike. Boeing’s CEO, Kelly Ortberg, acknowledged the difficulty of these decisions but emphasized their necessity for future recovery.
Additionally, Jim Cramer expressed concerns about Boeing’s financial health, highlighting the company’s balance sheet issues and missed opportunities to raise capital.
The strike has also led to halted negotiations with the International Association of Machinists and Aerospace Workers, as Boeing withdrew its latest offer after a month-long strike. The union’s demands for better wages and benefits remain unmet, despite mediation efforts.
As Boeing navigates these turbulent times, the potential for a credit downgrade looms, further exacerbating the company’s financial challenges.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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