Boeing’s battle with its striking workers has reached a critical point, deepening the company’s financial woes. After a month-long strike that brought operations in Washington to a standstill, Boeing has pulled its latest offer off the table, effectively ending negotiations with the International Association of Machinists and Aerospace Workers (IAM). Over 33,000 workers are demanding better wages and benefits, pushing the company to its limit.
Despite offering a 30% wage increase and improved retirement benefits, Boeing’s efforts to reach a compromise have been met with staunch resistance from the union. The union’s “non-negotiable” demands, despite mediation efforts, have led to a complete breakdown in talks.
The financial implications for Boeing are significant. The company’s Chief Operating Officer, Stephanie Pope, has revealed that they are considering selling $10 billion worth of new stock to mitigate the financial strain caused by the strike. Adding to the pressure, both S&P Global and Moody’s are reviewing Boeing’s credit rating, raising the alarming possibility of a downgrade to junk status. Such a downgrade would severely impact the company’s ability to borrow money and could further escalate the financial crisis.
The impact of the strike on Boeing’s stock is undeniable. Its stock price has plunged 38.57% year-to-date, dropping 17.95% in 2023 alone. Technical indicators paint a grim picture. Boeing’s share price, currently at $154.65, is significantly below its 20-day and 50-day simple moving averages, highlighting a strong bearish trend.
The Moving Average Convergence Divergence (MACD) indicator sits at a negative 3.13, further supporting the bearish phase. While the stock’s Relative Strength Index (RSI) of 44.48 suggests a neutral stance, the stock has been trading within the lower bearish band of the Bollinger Bands, reinforcing the bearish trend.
The only hint of a potential short-term bullish signal comes from Boeing’s eight-day simple moving average (SMA) of $153.94. However, with the 200-day SMA considerably higher at $186.15, the long-term outlook remains decidedly bearish.
The ongoing strike, the looming credit downgrade, and the stock’s downward trajectory paint a bleak picture for Boeing. Investors should brace for potential volatility and further turbulence as the company navigates this complex and challenging situation.
