More than a month has passed since over 30,000 Boeing machinists went on strike after rejecting a tentative contract, costing Boeing over $1 billion a month. The strike is putting pressure on new CEO Kelly Ortberg, who inherited a year of troubles, including a near-catastrophic incident with a 737 Max. Despite failed negotiations, the union demands a return to a pension plan. Talks have broken down and Boeing filed an unfair labor practice charge. Workers are without pay and lost health insurance, but there are job opportunities in the area. Ortberg plans to cut Boeing’s workforce by 10% and expects deepening losses, including delays in deliveries. He faces investors in October and the possibility of a downgrade to junk status. Analysts suggest an equity raise of up to $15 billion. The instability at Boeing could impact its suppliers, like Spirit AeroSystems, which is considering furloughs. Despite cost-cutting measures, some question whether Boeing’s approach is sustainable. Aboulafia estimates that labor in aircraft assembly accounts for about 5% of costs, indicating that Boeing may be sacrificing long-term stability for short-term savings.
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