Well, so much for that. Aerospace stock Boeing (BA) has passed on the counteroffer the International Association of Machinists and Aerospace Workers (IAM) put up after it passed on Boeing’s last offer, and new reports say that Boeing is stepping up its search for replacement workers to, basically, fire the union. Investors were not at all pleased, and Boeing shares plunged over 4% in Wednesday afternoon’s trading.
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Basically, we found out yesterday that the IAM District 837 modified Boeing’s last agreement to make it a four-year deal instead of a five-year. And Boeing passed, which sends the strike back into play. It has now been going on for nearly three months and shows no real signs of stopping.
That was when president and CEO of Boeing Defense Steve Parker issued a statement, saying, “In order to keep supporting our business and customers for the duration of the strike, we’re moving forward with the next phase of our contingency plan. We are accelerating our efforts to hire permanent replacement workers, which will likely result in some striking employees being displaced.” One of the big hurdles of such a plan was getting these replacement workers properly cleared for security, but that was a process that should have taken about six months. If Boeing started three months ago, when the strike began, then they may be well underway by now.
Surprising Results
Meanwhile, Boeing offered up some surprising earnings data, including a revenue beat and a cash burn rate that was clearly looking better than many saw coming. Boeing posted revenue of $23.27 billion for the quarter against $22.29 billion expected by analysts. That easily walked over last quarter’s $21.68 billion in revenue.
While the 777X is still lagging, and waiting for regulator approval, Boeing also posted wins in cash flow, as well as getting some of its lost production capability back. CEO Kelly Ortberg noted, “With a sustained focus on safety and quality, we achieved important milestones in our recovery as we generated positive free cash flow in the quarter.”
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BA stock based on 13 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 44.75% rally in its share price over the past year, the average BA price target of $258.91 per share implies 21.2% upside potential.
