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Boeing’s (NYSE: BA) seven-week labor dispute may be nearing its end as the International Association of Machinists and Aerospace Workers (IAM) prepares to vote on an enhanced contract offer this Monday. The strike, involving 33,000 workers, has dealt significant financial blows to the aerospace giant while highlighting ongoing tensions over employee benefits and compensation.
Latest Proposal from Boeing Includes a 38% Wage Increase
The latest proposal from Boeing includes a 38% guaranteed wage increase over four years and a $12,000 signing bonus, marking a substantial improvement from the previously rejected offer that featured a 35% raise and $7,000 bonus. The new terms come after 64% of union members voted down the earlier proposal, with workers particularly concerned about Boeing’s stance on reinstating the defined benefit pension plan eliminated a decade ago. The situation intensified on October 1 when Boeing discontinued employee healthcare benefits, leaving strikers to rely on $250 weekly strike pay.
The prolonged work stoppage has severely impacted Boeing’s operations, forcing the company to announce plans for laying off 17,000 workers – approximately 10% of its commercial unit. The strike escalated existing challenges for Boeing, which was already grappling with quality control issues in its commercial aviation division and a $2 billion loss in its defense and space business.
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Financial Toll of Boeing’s Labor Strike Mounts
The financial impact of the strike has been devastating for Boeing, which reported a $6 billion loss for the third quarter of 2024, with revenue declining from $18.1 billion to $17.8 billion year-over-year. Total estimated direct economic losses have reached $7.6 billion, including $4.35 billion in losses for Boeing and nearly $2 billion for its suppliers. The company’s stock has suffered as well, with year-to-date returns down 40.75%, significantly underperforming the S&P 500’s 20.65% gain.
Despite the ongoing challenges, Boeing’s stock showed signs of optimism on Friday, trading up 3.43% at $154.43 by midday. However, the company’s broader financial metrics remain concerning, with a negative profit margin of 10.88% and diluted earnings per share of -$12.95. While Boeing maintains $10.47 billion in cash reserves, its market capitalization has dropped to $115.448 billion, reflecting investor concerns about the company’s path to recovery amid labor disputes and operational challenges.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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