Union members hold up picket signs during a press conference following the counting of the collective agreement vote at the IAM District 751 Main Union Hall in Seattle, Washington, USA, Thursday, September 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Boeing Chief Financial Officer Brian West said the labor strike, which began just after midnight on Friday, hours after factory workers overwhelmingly rejected a new collective bargaining agreement and walked out of the workplace, would hit aircraft deliveries and “jeopardize” the company’s recovery.
West said the economic impact of the strike would depend on how long it lasts, but it would affect production of the company’s best-selling planes, including the 737 Max, its cash cow and best-selling jet, which is made in Renton, Washington.
“A strike would impact production, delivery and our operations, jeopardizing the recovery,” West said at a Morgan Stanley conference call on Friday. “So our immediate focus is, and we intend to do, to be laser-focused on actions that conserve cash.”
Boeing factory workers gather on a picket line near the entrance to the production facility in Renton, Washington, USA, on September 13, 2024, on the first day of the strike.
Matt Mills McKnight | Reuters
He said Boeing’s top priority was returning to the negotiating table “to reach an agreement that is good for our employees, their families and our communities.”
Boeing shares tumbled on Friday after Moody’s put the airline’s overall credit ratings on review for downgrade and Fitch Ratings said the company could be at risk of a downgrade if the strike continues for too long. Such measures could raise borrowing costs for the already-indebted manufacturer.
Boeing shares closed down about 4% on Friday.
West declined to comment on whether the company would be able to produce 38 737 MAX jets per month by the end of the year.
Sheila Kahyaoglu, an aerospace analyst at Jefferies, previously estimated that a 30-day strike could cost Boeing $1.5 billion.
West said Boeing’s immediate focus was “cash-conserving measures,” adding that new CEO Kelly Ortberg would work to repair relations with labor unions.
Boeing and the International Union of Machinists and Aerospace Workers announced a tentative labor agreement on Sunday that includes a 25 percent pay increase over four years, improved health care and retirement benefits, but workers have been seeking a 40 percent raise and say it won’t cover the rising cost of living.
94.6% of workers in the Seattle area and Oregon rejected the proposal, with 96% voting in favor of striking.
They walked off the job just after midnight on Friday.
The last time Boeing machinists went on strike was in 2008, when the strike lasted nearly two months.
The potential production disruptions come as the manufacturer faces a number of problems as it struggles to ramp up production and restore its reputation in the wake of a safety crisis.
Following a January incident of door plug explosions on nearly new Boeing 737 MAX 9 planes, the Federal Aviation Administration banned Boeing from increasing production of the MAX planes and ordered the FAA to step up inspections at production plants until regulators were satisfied with safety and quality procedures.
An FAA spokesman told CNBC on Friday that inspectors will remain on-site at Boeing facilities during the strike.