That sound you hear is hope departing aerospace company Boeing (BA) as the company’s machinists union rejected the latest contract offer from management, sending shares down nearly 2% in Thursday trading.
On a somewhat positive note, the latest contract was not rejected anywhere near as hard as the first one put forward by management. This time, 64% of union members rejected the contract, which offered a 35% wage increase over four years, along with improved 401(k) contributions, and a $7,000 bonus.
What it did not include was a return to a traditional defined-benefit pension plan that many of Boeing’s senior workers were looking for, according to media reports. Boeing is not likely to go with a pension, according to S&P Global Ratings, but the union seems to be heavily in favor of it. Boeing did not comment on the vote.
The Cost of the Starliner Debacle
Separately, more results are coming in on the Starliner concept, which is not doing Boeing any favors. A report from Gizmodo revealed that the losses on the Starliner program have now reached $1.85 billion.
Boeing currently holds ownership of the Starliner spacecraft and NASA serves as a customer of Boeing’s, buying round-trip mission access from to-and-from the International Space Station (ISS). Such missions have not gone well. Now Boeing owns the spacecraft, and can do little with it until at least 2025.
Is Boeing a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 15 Buys, five Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 13.29% loss in its share price over the past year, the average BA price target of $195.95 per share implies 26.42% upside potential.
