Boeing Under Pressure: Strike and Financial Turbulence

Boeing is once again facing significant challenges. In addition to the serious 737 MAX accidents and pandemic-related difficulties, the company is now confronted with a strike by 33,000 technicians in Washington. They are demanding substantial salary increases and better social benefits. The strikers are asking for a 40 percent wage increase over the next four years and the reinstatement of a company pension plan. In contrast, Boeing is offering only 30 percent and no pension, leading to a stalemate in the negotiations. Management, under the leadership of new CEO Kelly Ortberg, is in a dilemma. The production interruptions due to the strike are leading to enormous financial losses, which analysts say could rise to as much as a billion dollars a week. At the same time, Boeing's current profit situation leaves little room to meet the union's demands. Historically, even in profitable years, Boeing's gross margins were below 20 percent. Since the pandemic, the company has not managed to increase this above ten percent, which would be essential to achieve profits. A 40 percent increase in personnel costs would further increase financial pressure, especially since operational margins have been negative since the pandemic. Boeing's high debt of over 50 billion dollars with only 10 billion dollars in cash casts further shadows on its financial future. A controversial scenario is the issuance of new shares worth approximately 10 billion dollars to secure liquidity. The necessary price increases for aircraft also prove to be difficult. Strict regulations and long-term pricing agreements with airlines hinder Boeing's ability to optimize profits. These developments raise the question of whether a recovery in stock is on the horizon or if a downward trend is still expected. Cautious analysis recommends refraining from investments for the time being.