On Monday, Boeing’s stock plummeted as it froze hiring and considered short-term layoffs to keep costs in check as the strike of over 30,000 workers entered its fourth day.
In the closed trading session, the aerospace firm’s stock plunged by -0.78% to $155.55 apiece. However, it recovered losses in after-hours trading by rising 0.14% to $155.76 per stock.
According to reports, analysts anticipated the strike may cost Boeing $3.50 billion. The measures are, at best, a temporary fix, as rating agencies contemplate downgrading the company’s debt to junk status, and the stock continues declining.
Meanwhile, late last week, Boeing and union representatives agreed to increase pay by 25.00% over four years.
However, the International Association of Machinists and Aerospace Workers noted that nearly 95.00% of voting employees refused the contract, with 96.00% voting in favor of going on strike.
CFO Brian West warned employees in a letter on Monday that the strike poses a significant threat to the company’s recovery. West emphasized the need to take necessary actions to preserve cash and protect their shared future.
As a result, Boeing will halt the issuance of most supplier purchase orders for the 737, 767, and 777 programs impacted by the stoppage. He also added that these measures would likely cause uncertainty and concern.
Strike May Loss Boeing $100 Million in Daily Revenue: Report
According to reports, analysts expect Boeing to spend $100 million in daily revenue until it reaches a deal with its union, representing over 30,000 workers.
Boeing workers in the Seattle area who assembled the popular 737 MAX and other jets went on strike after rejecting their first entire contract in 16 years. The strike affects factories on the US West Coast.
Furthermore, a lengthened strike might cost several billion dollars, limiting the firm’s strained finances and threatening a decline in its credit rating.
Meanwhile, Boeing’s funds are already strained by negative free cash flow and weak margins. The company needs to generate enough cash flow to cover its debt obligations.
