Boeing Chief Financial Officer Brian West said on Friday that a strike by more than 30,000 workers at the company's West Coast factories that began on Friday will make it difficult for the company to meet its 737 Max production targets and stabilize its supply chain.
West also told the Morgan Stanley Laguna conference that he expects third-quarter margins at the company's defense and space division to be negative, similar to the second quarter.
Boeing shares fell 3.7% to $156.77 on Friday. The stock has fallen 40% this year.
Workers in Seattle and Portland, Oregon, where the MAX and other jets are made, overwhelmingly rejected a contract agreement that demanded higher wages and walked out.
The workers' first strike since 2008 comes as Boeing faces increased scrutiny from U.S. regulators and customers after a door panel on a 737 Max jet blew off during flight in January.
West said Boeing was making progress toward returning production of its best-selling jet to 38 planes a month by the end of the year, despite ratings agencies' initial skepticism about the target.
“We are on track to stabilize production and are on track to be at 38 units per month by the end of the year, but of course it will take time,” West said.
However, West did not comment on specifics about targets, which would vary depending on the duration of the attacks.
The strike is creating further uncertainty and concern for suppliers of parts and components for programs like the 737 MAX, many of which were already struggling to plan production after Boeing repeatedly changed its internal forecasts for them.
West said the company's top priority is stabilizing its supply chain, but that “is becoming an increasingly difficult goal.”
West suggested Boeing would halt parts supplies from some suppliers for programs affected by the strike for which it has ample inventory.
The company's 787 wide-body jets will not be affected because they are built by non-union workers in South Carolina.
Asked about supply chain issues, West said that for programs other than the 787, if suppliers are not behind and the company has enough inventory, “you know, we don't have to deliver any more.”
He said the messaging is “just happening overnight.”
