Boeing (BA) management had to define its success this year by avoiding a strike by its machinists. The executives have already failed at getting the company’s new flagship Dreamliner into production one time. In the process, they alienated a number of their key airline customers.
Boeing management also lost its bid for the new Air Force tanker plane. Northrop Grumman (NOC) got the contract and Boeing is trying to get it back. As the incumbent, Boeing should not have lost it in the first place.
Boeing played hard ball with the machinists. Its logic was that much higher wage and benefits deals would hurt the company down the road, if Boeing’s revenue growth began to slow. The machinists correctly looked at the Boeing back orders of planes and said the argument was hog wash. Boeing has been making a lot of money, enough to go around.
What Boeing management has almost certainly succeeded in doing is putting the Dreamline at risk of more delays. If the strike goes on for any extended period, it is hard to imagine that the project can keep up with its time tables.
Boeing investors have already been keelhauled by the company. Its stock is down from a 52-week high of $107.15 to under $63.
Investors can now watch the shares trade much lower.
Douglas A. McIntyre
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