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Things continue not Boeing well for a certain aerospace company, where an ongoing machinists’ strike threatens even greater spillover into its suppliers and customers.
In case you’ve missed the news (and if you have, we bet CEO Kelly Ortberg is jealous): Fresh off reporting a Q3 loss of nearly $6.2 billion, Boeing learned last Wednesday that 64% of striking machinists rejected its contract offer, sending their strike into a seventh week. That strike could cost the company $1 billion each month it goes on, according to an S&P Global estimate.
Spirit AeroSystems, which makes parts for some Boeing planes, may furlough or lay off “hundreds more employees”—on top ofg the 700 it already planned to furlough—if the machinists are still on strike after Nov. 25, according to CNBC. It’s taken years for Boeing suppliers to staff up after the pandemic, the outlet reported, but “Spirit’s consideration of additional furloughs demonstrates how the lengthy strike is weighing on an already-fragile aerospace supply chain.” Spirit, which Boeing is in the process of buying, reported a $477 million Q3 loss, CNBC reported, “more than double a year earlier.” Even before the strike, two sources at Boeing suppliers told Reuters that a six-month delay on its 737 Max plane “made it harder for them to forecast and plan production.
Big customers. Southwest Airlines CEO Bob Jordan said in an earnings call Thursday that it might have to change flight schedules “if the strike goes a lot further” and holds up deliveries of planes it had been counting on for 2025. “At some point, you’d have to moderate the capacity and schedules,” he said. Ryanair CEO Michael O’Leary told Reuters in mid-October that his company expects less traffic in 2025 as a result of Boeing’s delays. He doesn’t know whether Boeing will be able to deliver 30 planes that are due in the spring and early summer next year. “The big issue,” he said, “is…how many of those will we get?”
As management and the union dive back into negotiations, another big Boeing buyer—the federal government—is involved in the talks. The Biden administration is encouraging a resolution but is not pressuring the machinists’ union to take a deal, White House Press Secretary Karine Jean-Pierre said Thursday. Labor Department Acting Secretary Julie Su is talking to both Boeing and the machinists’ union, Reuters reported. “The two sides arrived at the now-rejected deal only after the Biden administration got involved,” according to the New York Times.