Boeing Co. shares took a dip on Monday, following the company’s announcement of a hiring freeze and delayed pay increases for its salaried workforce. This decision comes amidst a challenging period for the aerospace giant, as it grapples with the financial burden of a worker strike that began on Friday.
Boeing’s CFO, Brian West, revealed these measures in a memo to staff, highlighting the company’s need to conserve cash and safeguard its future. The strike, he explained, is significantly jeopardizing Boeing’s recovery, leaving them with no choice but to take these cost-cutting steps. To further address the situation, Boeing also announced a reduction in orders for its 737, 767, and 777 jets, while temporary furloughs for employees and executives are being considered.
The strike, which began on Friday morning, involves 33,000 aircraft assembly workers who walked off the job after rejecting a contract offer from Boeing and the International Association of Machinists and Aerospace Workers (IAM). The proposed contract, which offered a 25% wage increase over four years, was deemed insufficient by the workers.
Analysts estimate that the strike could cost Boeing a hefty $1.5 billion per month. While the company strives to reach a new contract agreement, the current situation presents a significant challenge to Boeing’s financial stability. Wall Street analysts, however, maintain an average 12-month price target of $205.67 for Boeing, suggesting potential upside for the stock in the future. The Street high target currently stands at $235, while the Street low target is $119.
With a year-to-date decline of 38.06%, Boeing’s stock performance has been impacted by the ongoing challenges. Despite the current market conditions, analysts remain optimistic about Boeing’s long-term prospects. However, the strike and its financial implications are likely to continue casting a shadow on the company’s immediate future.
