Boeing just can’t catch a break. You’d think after two failed attempts to negotiate with their largest union, the third time would be the one to seal the deal, right? Wrongo. 

(Source: Giphy) 

Turns out, the aerospace giant’s latest shot at resolving a month-long strike has crashed and burned harder than Boeing's friggin stock this year. Spoiler: it’s down 41% YTD, and this latest breakdown in negotiations isn’t exactly helping.

(Source: IBD) 

In short, Boeing pulled its latest contract offer—one that would’ve given striking workers a 30% raise over four years—after talks with the International Association of Machinists and Aerospace Workers (IAM) hit a brick wall. Boeing’s reasoning? The union’s “non-negotiable demands” were a dealbreaker. Meanwhile, the IAM clapped back, saying Boeing wouldn’t even touch the issues that matter most to its workers (So money isn’t the most important? I call BS…). 

(Source: Giphy) 

The strike, which kicked off on September 13, has effectively shuttered production of Boeing’s 737, 777, and 767 models. ICYMI, that’s bad news for Boeing’s bank account, which is hemorrhaging an estimated $100 million a day according to TD Cowen analysts. That’s roughly $3 billion and counting that has been swallowed up into the abyss. 

But, but, but… then again, it’s not like Boeing was exactly flying high before this either. Between production delays, the lingering god awful stench of the 737 MAX disaster, and ongoing quality issues (with an atrocious CEO, I might add), the company’s been in a tailspin for a while. So the last thing it needed was a prolonged labor dispute to further drag down its bloodied financials.

(Source: Yahoo Finance) 

On the other hand, Stephanie Pope, CEO of Boeing Commercial Airplanes, sent out an email to employees with an effort to do some damage control. “Our team bargained in good faith and made new and improved proposals to try to reach a compromise,” she wrote. Translation: we gave them a 30% raise offer, and they still weren’t happy. 

But the IAM wasn’t buying it. They claim that an overwhelming majority of their 33,000 striking members shot down Boeing’s offer, which would’ve bumped average annual pay from $75K to $111K by the end of the four-year contract. Soooo… turning down free money, much?

(Source: Giphy) 

Unsurprisingly, the markets didn’t exactly throw a revival when news broke that negotiations had collapsed. Boeing’s stock took another hit, dropping nearly 3% yesterday while adding another -1.27% dip today. So clearly, this isn’t just a week at the office for Boeing’s stock—this strike is the cherry on top of a 40% stock slide that’s been going on all year. Ooof. 

Plus now, to make matters worse, S&P Global Ratings slapped Boeing with a spot on its CreditWatch Negative List. Which means Boeing might be facing a credit downgrade that could not only jack up its borrowing costs— but absolutely crush Boeing's financials, especially since they’re already drowning in $58 billion of debt. For context, Boeing’s debt was a relatively chill $9 billion just a decade ago. 

(Source: Reuters) 

Meaning, if things keep heading south, analysts are speculating that Boeing might need to take a drastic step: selling equity to raise cash. Sure, it could shore up the company’s finances, but it’s also a surefire way to tick off shareholders by diluting their stake. Boeing’s already in rough shape with its investors, and this kind of move would be like pouring salt in the wound.

Meanwhile, the striking workers aren’t exactly living the high life either. Many have had to pick up temporary gigs to make ends meet, since union strike pay is only $250 a week. Oh, and let’s not forget, they’ve lost their company-provided health coverage too. Yet, despite the financial strain, the union’s resolve doesn’t seem to be cracking. Rob Tompkins, a quality assurance inspector, summed up the vibe: “The union membership is really unified right now. I’m ready to stay out until January if need be.” Again, bigly words for a guy surviving on $250 a week.

(Source: Reuters) 

For Boeing though, this just proves the pressure is at an all time high for the company. And their ability to resolve the strike quickly and fairly will have a huge impact on its ability to ramp up production of the 737 MAX and develop future aircraft models—both of which are critical to maintaining market share.

But with no further negotiations on the calendar and both sides digging in for the long haul, Boeing, its workers, and its investors are in for a prolonged stretch of uncertainty. One thing’s for sure: Boeing better hope that “fourth time’s the charm” because right now, they’re running out of time and options.

(Source: Giphy) 

In the meantime, keep an eye on Boeing, because even though they are a disgrace of a company right now… prices are steeping down to the cheap side. And if any miracle comes through - those who “BTFD” may be the last ones laughing in the end. 

Of course, do what you will with this information and please act accordingly - as always stay safe and stay frosty, friends! Until next time…

P.S. Today’s alert has already hit a peak of 40% this morning! Could it reach 100% by days end?! Click here ASAP to get the details…

Stocks.News does not hold positions in any companies mentioned in the article.