Is Boeing a Buy After Worker Strike?

Investing

Published: September 13, 2024 7:10 am

24/7 Wall St. Insights

Boeing Co. (NYSE: BA) shares have sold off because of a new worker strike.
Investors have to decide if they think the worst is behind the aerospace giant now.
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Boeing Co. (NYSE: BA) shares have sold off because of a worker strike. International Association of Machinists and Aerospace Workers members walked out of Boeing’s massive site in Seattle. Over 30,000 workers are part of the action.

The factory assembles Boeing’s popular 737 Max and its 777 and 767 aircraft. If the action is prolonged, it will affect revenue. The question is whether Boeing’s safety issues and the strike will cause the stock to bottom and whether the shares will climb when one or both issues are resolved. The worker contract is expensive. The union wants a wage increase of 40% over three years.

Boeing’s stock is down 37% this year, while the S&P 500 is 17% higher. It trades near its four-year low.

On top of the strike, the door blew off a 737 Max 9 in January while flying 14,000 feet above sea level. Investigators said the bolts that held the door had not been installed correctly. The incident led to an investigation, which made it clear that Boeing had assembly quality issues.

The air door incident and subsequent investigations cost CEO David L. Calhoun his job in March. Robert “Kelly” Ortberg, former CEO of supplier Rockwell Collins, became Boeing chief executive in August. Experts agreed that it would take months, or even years, to turn the company around by getting the confidence of carriers and the flying public. Boeing is bleeding billions of dollars of losses per quarter.

The company’s problems worsened recently. A Boeing Starliner spacecraft took two astronauts to the International Space Station, but safety questions about the spacecraft prohibited its use to return them.

So, have all these problems driven Boeing stock to a bottom? If investors want to take the risk that the worst is behind the company, they may want to also risk a part of their portfolios.

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