Boeing shares fall after workers vote to keep on striking

Bengaluru/Paris — Boeing shares fell 2.7% in US pre-market trading on Thursday after workers voted to extend a nearly six-week-old strike, throwing new uncertainty over the company’s efforts to stabilise finances and restore its battered image.

In total, 64% of US west coast factory workers on Wednesday rejected the company’s latest contract offer, leaving assembly lines idle for nearly all the planemaker’s commercial jets including the 737 Max, the backbone of its balance sheet.

The offer included a 35% general wage increase over four years but no defined benefit pension plan, which was one of the striking machinists’ main demands.

The rejection is a blow for new CEO Kelly Ortberg, who took the top job in August on a pledge to work more closely with factory workers than his predecessors, and leaves the company with dwindling options as it continues to bleed cash.

“Boeing is going to have to settle it and just make a higher offer, because they are just not in a position to duke it out,” Agency Partners analyst Nick Cunningham said.

Analysts said the vote could influence efforts to carry out a refinancing needed to stabilise its operations after the strike hampered its recovery from a string of previous crises.

Many suppliers are also facing financial difficulties.

Last week, Boeing filed papers giving itself a window to raise as much as $25bn to avoid losing its investment-grade rating, and separately secured a $10bn credit.

But although many analysts say Boeing would prefer to wait for the end of the strike and start generating more cash through deliveries before going to the markets, the labour power struggle has placed it under mounting pressure to clear the air.

“We wouldn’t rule out a capital raise before the strike ends ... depending on market conditions,” JPMorgan analyst Seth Seifman said in a note after the vote.

Even before the vote by 33,000 striking workers, CFO Brian West surprised analysts on Wednesday by acknowledging that Boeing would continue to bleed cash in 2025.

West declined to be drawn on the timing of an equity fundraising, but told analysts: “We’re monitoring events closely and well access the markets whenever we determine it’s the right time.”

Coming on top of back-to-back crises over safety, quality and an industry-wide shortage of parts and labour, the vote on Boeing’s first major strike in 16 years overshadowed a $6bn loss for the third quarter, also announced on Wednesday.

Ortberg laid out plans to restore Boeing’s fortunes after it lost significant share to European rival Airbus but told staff and investors that the turnaround would take some time. 

Reuters