The wrangling begins, as aircraft maker Boeing (BA) continues to stare into the abyss while trying to pull itself back from the brink. Negotiations have begun with the striking union, which is staging its first strike in approaching 20 years.
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The latest figures suggest that the strike is costing Boeing somewhere around $100 million per day, according to a Reuters report. Thus, Boeing has all sorts of incentives to offer concessions to get employees back to the table and back to work. The latest offer turned out to be much less welcome than expected; Boeing offered a 25% raise over four years instead of the 40% the union wanted but also reportedly pulled an annual performance bonus.
With Boeing’s finances already under fire and its order backlog growing, it is already looking to cut costs, including some furloughs for currently-employed workers not part of the union, as well as a freeze in hiring. Outsiders are looking for a fairly quick resolution – three to four weeks in the case of Ryanair (RYAAY) CEO Michael O’Leary. However, even that would still mean further delays to already-delayed orders.
A Legacy of Problems
Meanwhile, a new report from the Seattle Times details what Boeing workers have been dealing with of late. While older workers remember how well they did at Boeing, the more recent crop of workers cannot say the same.
While the unions in the past offered up financial concessions—which Boeing took—a combination of rising inflation and a tech boom in the Puget Sound area have sent housing costs surging. Thus, the job that was once good enough for a higher-class lifestyle is just barely getting by. That likely has something to do with why the Boeing employees are on strike right now.
Is Boeing a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 15 Buys, four Holds, and two Sell ratings assigned in the past three months, as indicated by the graphic below. After a 23.73% loss in its share price over the past year, the average BA price target of $213.95 per share implies ~37% upside potential.
