Boeing (BA) has delayed the launch of its Dreamliner three times. Supply chain trouble and manufacturing flaws have damaged the company’s reputation with its customers and opened a door for more competition from Airbus. The set-backs have been so substantial that some Boeing customers want compensation for the late deliveries.
None of this has done any good for Boeing shareholders. Despite the fact that the company has a huge backlog of orders, its share price is $63, near a 52-week low and down from the period high of $107.15.
Boeing’s problems may be getting worse. The International Association of Machinists and Aerospace Workers could strike the company if it does not get better health benefits and pension contributions.
Unions and management often conspire to cut their own throats. If Boeing cannot deliver the Dreamliner on time. earnings suffer. That, in turn, undermines the company’s ability to pay-out better wages and benefits to employees.
To avoid a disaster which could bloody both parties, Boeing should offer the union an extraordinary deal. It should trade large improvements in benefits for on-time delivery of the Dreamliner. The union should get a good deal of what it wants if the planes come off the assembly line as per schedule for each of the next five years.
The union will probably try to shut down Boeing to prove its point. By doing so, it will only cripple its own long-term prospects.
Douglas A. McIntyre
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