Boeing (BA) stock hovered near 52-week lows on Tuesday after the planemaker’s largest union went on strike last week and analysts estimated that the corporate could lose over $100 million per day amid the work stoppage.
Members of the International Association of Machinists and Aerospace Staff (IAM) went on strike last Friday after rejecting a contract offer from Boeing. The Seattle-area employees help construct the planemaker’s hottest 737 MAX and other jets.
The timing and length of the strike could put the corporate’s recovery at stake as its recent CEO, Kelly Ortberg, tries to get past recent production missteps.
A source acquainted with the negotiations told Yahoo Finance that IAM and Boeing representatives were meeting in person on Tuesday with a mediator helping to facilitate the talks. Boeing is “able to hammer out an agreement,” in response to the source.
IAM didn’t immediately reply to Yahoo Finance’s request for comment on the meeting and ongoing negotiations.
The corporate laid out aggressive cost-cutting measures on Monday, which included a hiring freeze. The Arlington, Va.-based company can also be considering temporary furloughs for a lot of employees in the approaching weeks.
“They [Boeing] have quite a lot of pressure to get their assembly line in good order,” Morningstar equity analyst Nicolas Owens told Yahoo Finance. “And the strike interferes with that and delays any progress they were making on mainly decertifying their assembly process for planes just like the 737.”
While Moody’s recently placed Boeing’s credit standing under review, S&P Global said its status is secure for now, provided the strike is short-lived, which many Wall Street analysts expect it should be.
“A shorter strike, on the order of weeks, would likely be manageable for Boeing and never result in a negative rating motion. Nevertheless, we consider an prolonged strike could be costly and difficult to soak up, given the corporate’s already strained financial position,” said S&P said in a press release this week.
The aircraft manufacturing giant has been navigating a terrible yr, starting in early January when the fuselage of a 737 Max 9 ripped open at 16,000 feet during an Alaska Airlines (ALK) flight.
The incident led to a series of regulatory problems, investigations, lawsuits, production delays, a CEO substitute, and a tumbling stock price.
Last month Ortberg, an aerospace industry veteran and Boeing outsider, took excessive job at the corporate.
On the Morgan Stanley Laguna Conference last Friday, CFO Brian West noted “good momentum” prior to the strike, with “ramping production, while at the identical time, incorporating significant improvements” into the manufacturer’s quality and production system.
Boeing shares are down greater than 35% yr so far. They touched a 52-week low on Monday. The corporate is predicted to report quarterly results next month.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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