Boeing, union have "chasm to cross" amid worker strike - Vertical Research

Investing.com -- The gap between the demands of Boeing (NYSE:BA ) and the union representing more than 30,000 striking workers is "a chasm," according to analysts at Vertical Research Partners.

In a note to clients on Friday, the analysts noted that, on pay alone, the aerospace giant is offering a wage bump of 25% over four years -- well below the 40% increase desired by the International Association of Machinists (IAM) district negotiating on behalf of Boeing employees in the US Pacific Northwest. On other issues, particularly pensions, there is "no obvious middle ground," the analysts added.

"On top of this, as we have noted before there is 'bad blood' between Boeing and the union members over the way they have been treated in previous labor contract discussions," the analysts said.

The strike -- Boeing's first since 2008 -- is tipped to be potentially costly for the company at a time when it is already facing concerns over its safety record and production levels. The Vertical Research Partners analysts now estimate that, should the labor action continue for one month, the company could see a loss per share of $5.75 in its 2024 fiscal year. They had previously projected a full-year per-share loss of $2.26.

The analysts also lowered their estimates for 2025 earnings per share to $4.07, down from $5.75.

Prior estimates from other analysts have warned that Boeing could see its revenue hit by more than $100 million every day until the dispute is settled.

On Thursday, US Transportation Secretary Pete Buttigieg said that he believes both sides can come to an agreement, adding that "both parties want to get a resolution."

Boeing, meanwhile, has said that is continuing to hold "good faith" talks aimed at forging a deal that will resume operations. It announced on Wednesday that it will furlough tens of thousands of employees due to the strike.

Last weekend, Jon Holden, the leader of the striking union, warned that the work stoppage could drag on "for a while." Speaking in a radio interview on Saturday, Holden said the workers have the "most leverage and the most power at the most opportune time that we've ever had in our history." Members of the union "are expecting" their negotiators to use that influence, he added.

Holden had initially backed a tentative deal with Boeing. However, workers overwhelmingly voted against the new contract and chose to begin a strike last Friday.

Source: Investing.com