The machinists strike now roiling Boeing threatens the company’s financial recovery and its ability to hike 737 production to 38 monthly by year-end.
The walkout, which started on 13 September, will also slow Boeing’s deliveries of 787s, despite those jets being produced in a non-union shop, according to Boeing chief financial officer Brian West.
“From a financial perspective, the impact will be dictated by the duration of the work stoppage… and will jeopardise our recovery,” West said on 13 September during a Morgan Stanley investor conference.
Boeing’s machinists walked off the job after voting on 12 September by a 95% margin to reject terms of a tentative employment contract that would have provided 25% average wage gains over four years.
Though the International Association of Machinists had initially sought 40% gain, union leaders last week green lighted the tentative deal and urged members to accept it.
The union’s rank and file had other ideas.
“We were disappointed,” says West of the vote.
Boeing’s operation is now halted in Renton, where it assembles 737 Max and 737NG-based P-8 military surveillance jets, and Everett, home to 777, 767 and 767-based KC-46 assembly.
Work has also halted at sites in Washington and Oregon where Boeing fabricates tools, kits and assemblies related to aircraft electric systems, interiors and propulsion, it says.
In response to the walkout, Boeing has started the work of storing aircraft and components.
A source familiar with Boeing’s operation says the company might, during the strike, be able to deliver a small number of jets that have already received airworthiness certificates from the Federal Aviation Administration. The number of those certificated aircraft is said to be in the single digits.
Analysts have estimated a strike could last several weeks. West says Boeing’s new chief executive Kelly Ortberg “is personally engaged [in negotiations] and focused on restoring trust with our people and the union”.
Boeing’s non-unionised 787 production site in North Charleston, South Carolina continues operating and the company still hopes to bring 787 production to five monthly by year-end.
But the walkout will hinder deliveries of already produced 787s, says West. “We will deliver fewer 787s out of inventory, because that work [is] done in Everett.”
Boeing has for several years been working to offload a 787 stockpile it accumulated during delivery pauses.
West says Boeing now seeks to maximise its conservation of cash and to retain its investment-grade credit rating, which some analysts describe as a critical task. Bloomberg Intelligence analyst George Ferguson has said Boeing’s cash balance of $10.9 billion at end-June is about the minimum it needs to operate.
West says Boeing is open to raising cash for the purpose of stabilising its operation and its suppliers’ operations, but adds that achieving those objectives “just got harder”.
