By outdoor-nature-child.com Boeing, the leading American aerospace manufacturer, is currently grappling with significant challenges as negotiations with its largest union have hit a wall for the third time, extending a strike that has already lasted nearly a month. The company has rescinded its wage proposal for around 33,000 U.S. factory workers, a move that’s contributed to the continuing labor dispute. S&P Global reports that even with Boeing’s attempts at cost-cutting, including implementing unpaid leave, the strike is leading to monthly losses exceeding $1 billion. This dire situation has prompted S&P to place Boeing’s credit rating on a negative watch list, raising the possibility of a downgrade to junk status.
The strike, initiated on September 13 by members of IAM District 751, has largely centered on unresolved issues around wages and pensions. After federal mediators got involved, both parties engaged in renewed negotiations on October 7 and 8. Boeing proposed a 30% wage increase along with enhanced retirement benefits, but those discussions ultimately collapsed with no clear resolution or upcoming negotiations scheduled.
In defense of its decision to withdraw the wage proposal, Boeing argues that it isn’t feasible to enter new negotiations while trying to conserve cash.
The repercussions of the strike are weighing heavily on Boeing’s operations. Following the latest talks on October 8, S&P Global warned that the strike could jeopardize the company’s recovery efforts, making it unlikely for Boeing to achieve its target of producing 38 MAX aircraft per month by the end of the year. The company’s credit rating faces potential downgrade alongside similar evaluations from Fitch and Moody’s.
Currently, all three major credit rating agencies classify Boeing as the lowest tier of investment-grade status. A downgrade could result in higher borrowing costs for Boeing and might drive away investment funds that typically avoid speculative-grade assets. Moody’s has highlighted that Boeing will encounter $4 billion in debt maturing next year, with an additional $8 billion due the following year.