Boeing stock (BA) rose to a 52-week low on Friday as this week’s breakdown in negotiations diminished hopes for a quick resolution to the ongoing labor strike and the aircraft maker took a tougher stance against its largest union. It’s up 2% from its low.
On Thursday, the aircraft manufacturer filed unfair labor practice charges against representatives of the International Association of Machinists and Aerospace Workers (IAM).
Boeing announced in a statement this week that as a result of the mediation, the company further improved on its previous proposals, but that “the union has not seriously considered these proposals and continues to assert unreasonable demands.”
Boeing said in a statement: “The union’s public rhetoric is misleading and makes it difficult for our employees to find solutions. We remain committed to reaching a compromise to end the strike.” said.
The move comes days after negotiations involving a mediator broke down and the aircraft maker withdrew its contract offer on Tuesday.
IAM did not respond to requests for comment.
“This is just a pressure move (by Boeing), but like most strikes, it ends with them coming back to the table and resolving it,” said Nicole Brenneke, an employment lawyer in New York City. ” New York City employment attorney Nicole Brenneke told Yahoo. finance.
Workers’ strikes have proven costly for Boeing in a number of ways.
The shutdown halted the company’s recovery efforts to increase production of its best-selling 737 Max from about 25 planes a month in June and July to 38 planes a month by the end of the year.
S&P Global estimates that the strike will cost the company about $1 billion per month, after taking into account cost-cutting measures taken by the company in response to the strike.
Earlier this week, credit rating agencies placed Boeing on CreditWatch Negative, raising the possibility of a downgrade if the shutdown continues through the end of the year. Increased credit risk makes it more difficult and expensive for businesses to borrow money.
S&P expects Boeing to suffer a cash outflow of about $10 billion in 2024.
As a result, Wall Street analysts expect Boeing to need to raise cash through an initial public offering. At the end of the second quarter, Boeing had approximately $58 billion in total debt and $12.6 billion in cash.
“Based on conversations with investors, it’s no surprise that Boeing is considering a capital increase. Most investors believe that the company has raised more than $10 billion, perhaps following the end of the machinists’ strike. I think we expected it to raise,” JPMorgan analyst Seth Seifman and his team wrote in a recent note.
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Analysts say the amount raised could depend on how long the strike lasts, and investors may be reluctant to sign on if the strike is still underway.
Boeing workers wave picket signs at passing drivers as they strike after union members voted to reject a contract offer near the company’s plant in Everett, Wash., Sunday, Sept. 15, 2024. (AP Photo/Lindsay Wasson) (ASSOCIATED PRESS)
The union members resigned on September 13 after rejecting the tentative contract. After a third round of negotiations broke down on Tuesday, the union announced that Boeing rejected offers to raise wages, provide vacation and sick leave, and had no intention of restoring pension benefits.
IAM is planning a rally next Tuesday.
Boeing stock has fallen about 40% since the beginning of the year.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
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