The one thing aerospace stock Boeing (BA) managed to do very well, according to some recent analysis, was wait out the strikers in St. Louis. The International Association of Machinists and Aerospace Workers District 837 managed to fight hard for nearly four months, but that time was about its limit. That’s what a new report suggests, though investors do not much care for that news at all. In fact, Boeing shares were down nearly 3.5% in Thursday afternoon’s trading.
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Basically, Boeing managed to wait out the St. Louis strikers, and with its fifth contract proposal, managed to get fully 68% of the union to vote in favor. After nearly four months of missed wages and no health insurance, that was about all it could take, and thus the union was willing to settle for less. As union member Frank Maniaci noted, “Really I think the members just realized that no matter how long we were going to be out on strike, we really weren’t going to get much more out of the contract.”
Michael Duff, a law professor at St. Louis University, noted, “You’re coming up on the holidays. You’re coming into winter, you can’t imagine being out on the picket line during the winter. All those kinds of things start to factor in.” And this was enough, despite St. Louis being offered a contract that paid half the ratification bonus of the Seattle staff, a 25% lower 401(k) match on the first 8%, and a wage increase that was substantially lower as well.
Going All Boeing
Meanwhile, a welcome development landed for Boeing, as Air Canada (TSE:AC) declared that it was converting part of its operation to an all-Boeing fleet. Plans to make such a move have been in the works for almost a year now, reports note, but Air Canada’s budget arm, Air Canada Rouge, will eventually be an all-Boeing fleet.
Air Canada will transfer its 737 MAX 8 inventory to Air Canada Rouge, and move the Airbus (EADSY) A320s to Air Canada itself. Given that the 737 MAX 8 typically costs about 20% less to operate than the A320, the move works particularly well for a budget airline.
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, two Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 29.49% rally in its share price over the past year, the average BA price target of $250.50 per share implies 39.8% upside potential.
