Boeing Stock: Boeing (BA) saw its stock price rise significantly on October 21, jumping 4.8% to close at $159.82, its highest level since early September. This increase comes in the wake of news of a possible resolution to the labor strike that has significantly affected the company’s operations. Over the weekend, the International Association of Machinists and Aerospace Workers announced that its 33,000 members will vote on a revised Boeing contract on October 23.
The outcome of this vote could have major implications for Boeing’s future, as the strike, which began on September 13, has cost the company an estimated $1 billion per month, halting production of key aircraft models, including the 737 and 777. Boeing’s third decision in less than two months includes a 35% pay increase over four years and a $7,000 certification bonus increase. Despite these concessions, Boeing has stood firm in its refusal to reinstate the traditional pension plan, a sticking point for many union members.
Analysts’ reactions to the proposed deal were mixed, with some reducing their price targets for Boeing in light of the increased costs. Seth Seifman’s team at JP Morgan maintained an overweight rating on BA stock but lowered its price target to $195 in light of the potential for the business agreement to result in at least a $1 billion increase in Boeing’s annual expenses. Jefferies analyst Sheila Kahyoglu estimated the cost impact closer to $1.3 billion, but did not provide a new target price, while Wells Fargo analyst Matthew Akers lowered his price target to $109 from $110, citing uncertainty over contract approval. .
Despite these concerns, investor optimism about the resolution of the potential labor dispute and the company’s broader efforts to stabilize its operations have helped Boeing stock remain resilient.
With the Labor vote looming, Boeing is also preparing to announce its third-quarter earnings on October 23, with the company already warning of a big loss. Boeing reported preliminary results earlier this month, revealing a loss of $9.77 per share and a quarterly loss of $6 billion, the largest since the pandemic devastated demand for aircraft in 2020. Revenue for the quarter is expected to be about $17.84 billion. Dollars, slightly exceeding analysts’ expectations of $17.82 billion.
Boeing’s new CEO, Kelly Ortberg, has been vocal about the company’s need to become leaner and more efficient. Since taking over in August, Ortberg has focused on addressing quality control issues at Boeing, cutting 10% of its global workforce and setting his sights on lowering operating costs while keeping the company’s production capabilities intact.
Despite the difficult environment, analysts remain cautiously optimistic about Boeing’s long-term prospects. The end of the labor strike, combined with Boeing’s efforts to streamline its operations, could provide much-needed stability. However, if the mechanics reject the contract, Boeing could face an existential crisis, with the possibility of more layoffs or even bankruptcy.
For now, investors will be closely watching the outcome of the workers’ vote and Boeing’s upcoming earnings report, with British Airways stock poised for more volatility in the coming weeks.
