It's been two weeks since Boeing's 33,000 machinists went on strike, and the company is bracing for financial fallout.
The aircraft maker has put hiring freezes, furloughs, pay cuts for its leaders and forced most of the D.C. lobbying firms it hired to save cash after its machinists walked off the job shortly after midnight on Sept. 13. Implemented cost-cutting measures such as suspending payments. .
Boeing and the International Association of Machine Manufacturers (IAM) are scheduled to meet on Friday for negotiations, but they remain at odds over key issues such as wage increases and pensions, further straining the company that has weathered intense scrutiny this year. Become.
The strike will cost the company, its employees and suppliers a total of $1.4 billion through September 27, according to new estimates from consulting firm Anderson Economic Group.
Nearly $1.1 billion of the total estimated costs will be borne by shareholders, with direct costs to Boeing employees of about $207 million, according to the company's analysis.
“The company has a significant backlog and is on the verge of losing both current production and future parts and service business,” said Patrick Anderson, principal and CEO of Anderson Economics. “The facts mean that Boeing shareholders are effectively losing money every day this strike continues.” group.
“Boeing employees on strike are also losing. As the strike drags on, more Boeing suppliers will be forced to cut wages and hours.”
Anderson noted that “as is often the case in large-scale industrial strikes, the second week of the strike was more expensive than the first.”
According to one report, costs in the first week of the strike totaled $572 million. Previous analysis By Anderson Economic Group. Additional losses this week for Boeing suppliers and non-Boeing employees in Seattle affected by the strike are estimated at $144 million and $25 million, respectively.
After union members overwhelmingly rejected an initial contract proposal earlier this month, IAMrefused to voteThis week, we will talk about Boeing's “best and last offer.”ContainsHe will receive a 30% raise and a $6,000 signing approval bonus, which is double the original offer.
The company initially gave unions until midnight Friday to vote on the proposal, but quickly rescinded that plan after union pushback.saidOn Wednesday, it said the proposal “does not meet the needs of our members.”
While the union called the 30% pay rise “progress,” it pointed out that its members have only received an 8% pay rise over the past decade at a time of high inflation and rising costs of living.
“After 10 years of hard work and sacrifice to keep Boeing flying, the company's executives rewarded themselves with record bonuses. Meanwhile, building these aircraft and making the darkest “The workers who supported the company during this period were struggling to make ends meet,” the union said. With an update.
A Boeing spokesperson declined to comment on further negotiations.
The strike attracted the attention and support of Washington lawmakers. “This is an important step in the right direction,” said Sen. Maria Cantwell (D-Wash.), chair of the Senate Commerce, Science, and Transportation Committee. Posted He posted a photo of himself with striking workers on X with the caption “I support the mechanics.” Other lawmakers also expressed support for a fair contract, including Rep. Pramila Jayapal (D-Wash.), Rep. Rick Larsen (D-Wash.), and Sen. Patty Murray (D-Wash.).
“At a time when Boeing has a lot of work to do to get back on track, I hope that Boeing officials and mechanical engineers can reach a fair agreement as soon as possible,” Murray wrote. Post to X.
Boeing has been under intense scrutiny since a door plug on a 737 Max 9 exploded during an Alaska Airlines flight in January, prompting increased regulatory oversight, Congressional hearings and a series of whistleblowing complaints. .
In July, the company agreed to plead guilty to conspiracy charges and pay a $250 million fine as part of a proposed plea deal with the Department of Justice, and agreed to pay a $250 million fine for two 737 Max 8 incidents in 2018 and 2019. A year-long investigation into the fatal crash has concluded.
As Boeing Chief Financial Officer Brian West told employees in an email last week, in short: “The business is in a difficult time.”
“This strike seriously jeopardizes our recovery, and we must take the necessary actions to preserve cash and protect our common future,” West said. “We are working in good faith to reach a new contractual agreement that reflects their feedback and input.” Business can resume. ”
To conserve cash, Boeing cut executive pay and implemented staggered work schedules. We gave them one week off and three weeks off without interrupting their benefits.
Other cost-cutting measures include freezing hiring and pay raises, eliminating first and business class air travel, suspending charitable donations and marketing spending, suspending catered and food service at Boeing facilities, and This includes reducing the company's participation in trade shows. In West's email last week.
Boeing also suspended contracts with many federal lobbyists on the company's payroll, while outside consulting and non-essential contractor work was temporarily suspended. The pause isFirst reported by Politico.
A Boeing spokesperson declined to comment on questions about possible additional cost-cutting measures in the future, referring The Hill to West's email.
Fitch Ratings warned at the start of the strike that a prolonged suspension of operations of one to two weeks or more “could have a material operational and financial impact” and put the company at risk of a credit rating downgrade. did.
“The duration of the strike could impact the timeline for regaining pre-strike production momentum,” said Dino Kritikos, managing director at Fitch Ratings. “The strike schedule will also impact liquidity as the company continues to incur certain costs without associated production or revenue.”
Kritikos noted that after the last strike in 2008, it took Boeing four to six weeks to return to pre-strike production levels, and said the strike lasted 57 days, including a 52-day production stoppage. .
“The impact of a prolonged strike on ratings will ultimately be due to the need to maintain and generate sufficient liquidity to bridge risk-reduced business operations and more meaningful cash flow for debt repayments,” Kritikos said. There will be a balance to be struck,” he said.
