Boeing (B.A.) turnaround efforts were stalled due to a seven-week strike by the largest union that cost the company billions and delayed production of its planes.
This particular risk for its stock has now been deleted. The strike by the International Association of Machinists and Aerospace Workers (IAM) ended Monday evening, with union members voting in favor of the aviation giant’s latest contract offer. Analysts said the development should pave the way for a Boeing recovery.
“Boeing CEO Kelly Ortberg added another check to the ‘Boeing Turnaround’ list,” Bank of America analysts wrote Tuesday morning.
Shares of the aircraft maker rose 1% in early trading and were down slightly mid-session Tuesday. The stock is down more than 40% since the start of the year.
The workers’ strike was problematic for Boeing, which was trying to extricate itself from heavy debt following safety and production problems. which started at the beginning of January when a door stopper exploded from an Alaska Airlines plane (ALK) Boeing plane.
As of late October, the strike was estimated to have cost Boeing, its workers and suppliers nearly $10 billion in lost wages, revenue and suppliers, according to Anderson Economic Group.
Wall Street analysts remain cautious about how quickly the aircraft maker can ramp up its plane production. Much of it was on pause during the strike which began on September 13.
“Although ending the strike and returning workers to the factory floor is a significant step in the right direction, recovery (of production) will take time,” said analysts at Bank of America Global Research, maintaining their neutral rating on the stock with a price target. of $170.
Last month, Boeing announced a workforce of 10% reduction, and last week, raised over $21 billion in capital a decision widely awaited by Wall Street.
“Restarting and increasing production is necessary for the company to begin generating cash and paying down debt,” Ben Tsocanos, director of aerospace at S&P Global Ratings, said after the union vote.
The contract approved by IAM provides for a salary increase of 38% over the next four years.
Before the vote, the union released a message encouraging its members to approve the offer.
“We made an incredible deal together” read the IAM website. “Your entire bargaining committee believes it is time to end this strike and move forward. »
Workers can return to work on Wednesday, but no later than Tuesday, November 12.
“Even though the last few months have been difficult for all of us, we are all part of the same team,” Boeing CEO Kelly Ortberg wrote in a message to employees after the bargaining agreement was approved by 59 % of union members.
