Boeing Strike Threatens Major Delivery Delays and Financial Losses: What Investors Need to Know
Investing.com -- The ongoing strike by Boeing (NYSE: BA) workers on the US West Coast is expected to significantly impact the aerospace giant's plane deliveries this year, according to analysts at Jefferies.
In a critical note to clients, Jefferies analysts slashed their price target by a staggering 55% to $240. They contend that, assuming the labor action concludes by early October, Boeing's 2024 deliveries are now projected at 422 units, down from a previous estimate of 480.
For 2025, the forecast has been similarly reduced, from 672 to 600 deliveries.
Consequently, Jefferies now predicts Boeing will post an annual loss of $6.40 per share, compared to an earlier outlook of a $4.25 loss. Wall Street consensus estimates peg the loss at $4.71 per share.
Looking ahead to next year, Boeing's earnings per share (EPS) are expected to be $2.20, a significant drop from Jefferies' prior estimate of $5.60.
The labor dispute involves the International Association of Machinists and Aerospace Workers (IAM), representing over 30,000 striking Boeing employees in the US Pacific Northwest. The union is locked in tense negotiations with Boeing over compensation and benefits. Despite a previously reached agreement, workers voted against the deal earlier this month, leading to the strike.
Multibagger reports that Boeing initiated planned furloughs for thousands of employees in Washington State and Oregon last week, indicating the firm may be bracing for a prolonged strike.
Several analysts warn that an extended strike could be financially devastating for Boeing, potentially costing the company billions of dollars at a time when its safety record is under intense scrutiny. Boeing's CEO Kelly Ortberg, who assumed the role in August, has named ending the strike a "top priority."
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Breaking It Down: How This Affects You and Your Finances
What’s Happening?
Boeing, a major player in aerospace manufacturing, is facing a strike by over 30,000 workers on the US West Coast. This strike is disrupting their plane deliveries and could lead to significant financial losses.
Key Points to Understand:
- Reduced Deliveries: Boeing’s expected plane deliveries for 2024 and 2025 have been cut by analysts. This means fewer planes will be sold, impacting their revenue.
- Financial Loss: Analysts now predict a larger annual loss for Boeing, worsening the financial outlook for the company.
- Stock Impact: With reduced earnings expectations, Boeing's stock price target has been cut significantly. This could impact shareholders and those considering investing in Boeing.
- Labor Dispute: The strike stems from disagreements over worker compensation and benefits. Prolonged negotiations and strike actions can lead to further financial strain on Boeing.
Why Should You Care?
- Investors: If you hold Boeing stock or are considering investing, this strike and its financial implications are crucial. The reduced delivery estimates and increased projected losses could affect the stock's performance.
- Employees and Economy: Thousands of workers are furloughed, impacting their income and local economies. Extended strikes can lead to broader economic effects in the regions involved.
- Industry Impact: Boeing plays a critical role in aerospace and defense. Disruptions in their operations can have ripple effects across the industry, affecting suppliers and related businesses.
By understanding these elements, you can better gauge the potential risks and opportunities related to Boeing's current situation and make more informed financial decisions.