Interviewer: Boeing has been facing significant challenges lately, especially with its largest union. Can you provide an update on the ongoing negotiations?
Interviewee: Absolutely. Recently, Boeing and the International Association of Machinists (IAM) District 751 hit a significant roadblock in their negotiations, which has resulted in a strike that has now persisted for almost a month. The company retracted its pay proposal for around 33,000 U.S. workers, which has intensified the ongoing work stoppage.
Interviewer: What impact has this strike had on Boeing’s finances?
Interviewee: It’s been quite substantial. According to S&P Global, despite Boeing implementing cost-cutting measures, such as unpaid leave, the strike is costing the company over $1 billion each month. Because of this, credit rating agencies have placed Boeing’s credit rating under negative watch, suggesting a potential downgrade to junk status is possible.
Interviewer: How long has this strike been going on, and what issues are at the center of the dispute?
Interviewee: The strike began on September 13 and has primarily revolved around disputes over wages and pensions. Despite the intervention of federal mediators, negotiations that took place on October 7 and 8 did not yield any agreements. During those discussions, Boeing proposed a 30% wage increase and improved retirement benefits, yet tensions have remained high, and there is currently no scheduled date for further negotiations.
Interviewer: What is Boeing’s position regarding the negotiations at this time?
Interviewee: Boeing has expressed that retracting its wage proposal and suggesting new discussions is simply not reasonable at this juncture. The company’s current focus is on preserving cash amid these ongoing challenges.
Interviewer: It sounds like the strike is also affecting Boeing’s operational goals. Can you elaborate on that?
Interviewee: Yes, the ongoing strike is putting significant pressure on Boeing’s operations. S&P Global reported that the labor dispute is jeopardizing the company’s recovery efforts, making it increasingly unlikely that Boeing will meet its goal of producing 38 MAX aircraft monthly by year-end.
Interviewer: What could happen if Boeing’s credit rating gets downgraded?
Interviewee: A downgrade to junk status could substantially raise Boeing’s borrowing costs and may lead to investors, particularly those who avoid speculative-grade assets, pulling their investments. Currently, all three major credit rating agencies have placed Boeing at the lowest level of investment-grade rating. According to Moody’s, the company faces $4 billion in debt maturities next year and an additional $8 billion the year after that.
