Boeing Nukes Contract Offer With Union As S&P Warns About Potential Negative Credit Rating On Prolonged Strike

Boeing's troubles are escalating as the company's labor contract negotiations with its largest union, the International Association of Machinists and Aerospace Workers, have collapsed. The strike, which has been ongoing for 27 days, has led to Boeing withdrawing a labor contract deal that would have given over 33,000 IAM members 30% raises over four years. IAM is seeking a 40% pay increase over four years. Boeing Commercial Airplanes President and CEO Stephanie Pope stated that the union made non-negotiable demands that the company cannot accept if it is to remain competitive. The union countered that Boeing negotiators refused to increase wages or reinstate the defined benefit pension. S&P Global Ratings has placed Boeing on CreditWatch negative, warning that the company's investment-grade credit rating may be slashed to junk if the strike persists. S&P estimated that the labor action costs Boeing $1 billion per month and expects the company's cash balance to dwindle. Boeing may need to raise money via public equity markets, which could lead to dilution fears. The company's shares are down 1.6% in premarket trading. S&P will resolve the CreditWatch placement by the end of the year, and a prolonged strike could lead to a credit downgrade to junk status. Boeing faces significant risks if the strike continues, including increased costs and delayed recovery in aircraft production and cash flow generation.