Boeing strike poses real threat, Boeing says

While he treads water, waiting for the end his drivers’ strikeBoeing (bachelor) just officially announced on Monday that it is raise $19 billion in the offer of shares. AND in the prospectus for this stock sale, he shows exactly how important the work stoppage is in his vision of the future.

When companies sell shares to the public, they must inform the public about the risks inherent in the investment. The biggest problem Boeing faces right now is that the company won’t be getting workers back on assembly lines any time soon. On Boeing’s Form 424B5 (the SEC filing category under which the prospectus falls), the planemaker makes a bet. this is the worst headache in the section “Risks Associated with Our Business and Activities.”

“Some employees of our company and our suppliers are represented by unions,” the company says. “The work stoppages of our employees currently have a negative impact on our business, financial condition, results of operations and/or cash flows. Future work stoppages by our employees or those of our suppliers could also adversely affect our business.”

It’s an understatement, but corporately, Boeing is gradually revealing its onion-like layers of stress.

Corporate:

As of December 31, 2023, approximately 57,000 employees, representing 33% of our total workforce, were represented by unions under collective bargaining agreements of various durations and durations.

Translation: We have many trade union workers.

Corporate:

On September 12, 2024, our contract with the International Association of Machinists and Aerospace Workers District 751 (“IAM 751”), which represents more than 30,000 Boeing manufacturing employees primarily located in Washington state, expired, and 96% of IAM 751 members voted in favor creating a strike. On October 23, 2024, 64% of IAM 751 members voted to reject our latest proposal and continue the strike. Although we continue to negotiate the contract with IAM 751, we are currently unable to predict the duration of the strike, which began on September 13, 2024.

Translation: Many of these workers are on strike. Although we thought we were close to getting them back to work after a month and a half, we couldn’t do it and I don’t know what will happen next.

Corporate:

As a result of the strike, production of our commercial aircraft, with the exception of 787 production in Charleston, and certain of our defense, space and security products was halted, negatively impacting our business and financial condition. This shutdown has had, and is expected to continue to have, a negative impact on our key suppliers and customers. If we are unable to successfully negotiate a new contract with IAM 751 consistent with our assumptions and the strike continues for an extended period, our financial condition, results of operations and cash flows will continue to be adversely affected.

Translation: These workers do almost all of our aircraft. They are not at work costs us a lot of money, that’s cost of our suppliers a lot of money, and the longer the strike goes on, the more expensive it will all become for everyone who does business with us. (Consultancy Anderson Economic Group on Monday estimated that the Boeing strike, with its $9.7 billion impact, is the costliest this year — and nearly as costly as the United Auto Workers strikes against Detroit’s Big Three automakers last year.)

Corporate:

In particular, we expect further significant negative cash flows from operations this quarter and in future quarters until IAM 751 employees return to work, production resumes and supplies increase. In addition, this work stoppage and the actions we took in response to the strike to help preserve our financial condition, including planned workforce reductions, furloughs, hiring freezes and the suspension of certain purchase orders to suppliers, may adversely affect our ability to achieve our goals. strategic goals and maintain our investment grade credit rating.

Translation: We do our best to keep the lights on, but without them we really wouldn’t have a business. In fact we bring it all up much needed money through the sale of shares, because we have almost exhausted the megacorporate equivalent of a credit card.

Corporate:

We may experience additional shutdowns in the future, which could adversely affect our business. There are currently 9 unions in the United States with 27 independent agreements and 17 employee representative bodies internationally, and we cannot predict how stable our union relations will be or whether we will be able to meet union demands. Unions can also limit our flexibility in managing our workforce and operations. Actions by supplier unions may also affect us. Current and future work stoppages and instability in our union relations could delay production and/or development of our products, which could complicate customer relationships and result in reduced revenues.

Translation: Just a warning that this may happen again sometime in the future.

Not to mention, the contract rejected by IAM members last week was the third proposal put forward by Boeing. IAM is seeking a 40% wage increase and the restoration of pensions. Boeing’s first offer, the rejection of which started the strike, was a 25% wage increase. Second proposal considered “Boeing”best and last“, provided for an increase of 30%. What was also rejected. Boeing then abandoned negotiations. Acting Labor Secretary Julie Su came to town and managed to get Boeing to make another offer, this time for a 35% raise and raising the retirement age for IAM members who still have it. This was also rejected.

I.A.M. informed its members on Sunday that “Your union is in contact with the U.S. Department of Labor in an attempt to lead a return to the bargaining table.” While the latest contract vote was more in Boeing’s favor than previous results, the union said last week that internal polling shows union members remain unimpressed with what they are hearing from the company’s negotiators.

“While we cannot release the survey results publicly, which would give the company an unfair advantage, please know that wages and pensions remain top priorities,” it said.

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