Boeing may need to offer more concessions to end strike despite multibillion-dollar debt: BofA analyst

BofA Securities analyst Ronald J. Epstein reiterated a neutral rating on The Boeing Company (NYSE:BA), with an estimated price of $200.

The analyst sees Boeing as particularly vulnerable, noting that the company has delayed increasing its 737 production rate from 42 per month, originally set for September 2024, to March 2025.

A prolonged strike could further exacerbate the company’s current difficulties, Epstein added.

However, if the Spirit AeroSystems strike and subsequent contract negotiations set a precedent, the strike could be resolved in at least a week, Epstein adds.

The analyst estimates that Boeing may need to offer additional concessions, possibly approaching the IAM’s initial demand for a 40 percent pay increase.

Also Read: Boeing Stock Drops As 33,000 Aircraft Assembly Workers Strike

The analyst points out that both CEO Kelly Ortberg and COO Stephanie Pope have sent internal memos to Boeing staff trying to calm their feelings about the strike.

Pope said the proposed contract is Boeing’s best ever, highlighting the 25 percent pay increase despite the company’s hefty $60 billion in debt, the analyst points out.

Meanwhile, Kelly’s memo acknowledged that Boeing faces a difficult problem, partly because of past blunders, and warned that a blow could derail their hard-fought recovery.

According to the analyst, Boeing now has the task to act, fix the problems and prevent further “disruptions”.

Meanwhile, Boeing shares are trading lower after workers rejected a proposed labor contract, leading to a strike. Moody’s reviewed the company’s ratings for downgrade amid concerns.

According to Benzinga Pro, BA shares have lost 25% over the past year. Investors can gain exposure to stocks through the iShares US Aerospace & Defense ETF (BATS:ITA) and the Gabelli Commercial Aerospace and Defense ETF (NYSE:GCAD).

Price action: BA shares were trading down 3% at $157.87 when last checked on Friday.

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