Commercial aircraft manufacturer Boeing Co. (BA) has announced that it is cutting 10% of its workforce, or 17,000 jobs, as a strike by its machinists union drags on and its factories sit idle.
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The strike by the machinists is now in its fifth week and has ground airplane production to a halt. Analysts estimate that the work stoppage is costing the company $1 billion a month. Along with the job cuts, management said on October 11 after markets closed that they expect to report a loss of $9.97 per share in the third quarter due to the strike.
Boeing’s executive team also said that they won’t begin to deliver their newest 777X widebody airplanes until 2026, putting production of that aircraft six years behind schedule. And, Boeing plans to stop making commercial 767s in 2027. “It is hard to overstate the challenges we face,” said CEO Kelly Ortberg in a staff memo that was leaked to the media.
Mounting Problems at Boeing
The strike by 33,000 machinists is the latest in a series of problems at Boeing. The company has been grappling with a safety crises and loss of investor confidence for much of the year. Boeing has also undergone a leadership change, with Ortberg stepping into the CEO role this summer. However, the labor strike has been the most difficult challenge yet at Boeing.
Several credit rating agencies have warned that the company is at risk of losing its investment-grade status should the machinists strike continue much longer. Boeing has been burning through cash at a high rate since the strike began on Sept. 13. These are not the first layoffs at Boeing. In mid-September, the company announced that it was furloughing tens of thousands of staff. Boeing has 150,000 employees in the U.S.
BA stock has declined 42% this year and is currently trading near a 52-week low.
Is BA Stock a Buy?
Boeing stock has a consensus Moderate Buy rating among 21 Wall Street analysts. That rating is based on 15 Buy, four Hold and two Sell recommendations made in the last three months. The average BA price target of $206.11 implies 26.48% upside from current levels.
