Here’s why Boeing stock fell in September

Shares in the aerospace and defense giant Boeing (BA -0.40%) fell 12.5 percent in September, according to data from S&P Global Market Intelligence. The fall comes as Boeing management has failed to reach an agreement with the International Association of Machinists and Aeronautics (IAM) Union District 751 on a new contract.

Boeing’s Commercial Aerospace Troubles

The failure to reach a quick agreement led to an ongoing strike that is still unresolved. Unfortunately, that’s the last thing Boeing needs right now as it plans to ramp up aircraft production and return the company to cash flow.

As you can see, Boeing’s narrowbody 737 deliveries fell significantly in the first half of 2024 as production quality issues forced management to slow deliveries. Management’s plan was to return to a rate of 38 per month by the end of the year.

Data source: Boeing presentations. Chart by author.

In mid-September at Morgan Stanley Laguna Conference CFO Brian West was asked about the plan to hit 38 per month in light of the ongoing strike, and what he said, or rather what he didn’t say, spoke volumes: “Yes. I can’t comment. 38 per month, this rate depends so much on the duration of the strike.

Given this kind of commentary, it’s safe to assume that Boeing’s assumption of a 38 per month delivery rate on the 737 by the end of the year is under severe pressure.

Boeing’s defense business is also weak

As discussed, Boeing’s defense business has been a serial disappointment in recent years. As such, it’s no shock that one of the first actions of new Boeing CEO Kelly Ortberg is to oust Boeing Defense, Space and Security CEO Ted Colbert, effective immediately on September 20. The move highlights problems with the defense business. had a series of charges and losses on fixed-price development projects.

Image source: Getty Images.

Where next for Boeing?

Undoubtedly, the company faces challenges, and there are question marks surrounding its ability to fund the next generation of narrow-body aircraft over the next decade. However, its multi-year backlog ensures that Boeing has the potential to overcome its difficulties. A quick resolution of the contract negotiations will help. New CEO Ortberg is a well-respected figure in the aerospace industry, and a new defense chief could also help turn things around.

All of this means that it is in the hands of management to engineer a change.