The ongoing strike by 33,000 Boeing machinists has already cost the company $572 million in losses, according to an estimate from Anderson Economic Group, a Michigan-based research firm specializing in estimating the economic impact of disruptions like strikes.
The strike by the International Association of Machinists (IAM) union, which reached its seventh day, sparked concerns of a greater economic toll if a settlement isn't reached soon, Patrick Anderson, founder, and president of Anderson Economic Group told CNN.
"The first week of losses for Boeing are substantial, but they'll pale in comparison to what comes in the following weeks," Anderson told CNN.
Anderson noted that the recent losses are meager compared to the $1.6 billion impact of last year's autoworker strikes at General Motors, Ford and Stellantis.
Though the strike hasn't affected airlines yet, but Boeing's deliveries were already delayed due to heightened regulatory scrutiny following a January 737 Max incident involving a mid-flight door plug blowout.
The union told CNN that the strike shows no signs of easing. Meanwhile, as Boeing is set to initiate rolling furloughs for non-union employees to conserve cash during the machinists' strike, the losses may soar to $1 billion by early next week, experts predict.
The machinist's strike stemmed from a decade of pay halt and benefit cuts, which culminated in workers rejecting a proposed 25% wage increase to negotiate for a 40% hike to match industry standards.
Over 95% of Boeing's machinists rejected the company's proposed contract, leading to an overwhelming 96% vote to go on strike as workers felt undervalued after years of giving up benefits, including traditional pensions. The union demands recognition of their hard work and contributions to Boeing's success.
Meanwhile, Boeing's financial health is in jeopardy due to its startling $33 billion in losses since 2019. This vulnerability was exacerbated by the recent warning issued by credit rating firms Fitch and Moody's that Boeing's credit rating may be lowered to that of a junk bond, which will eventually hike borrowing costs.
To cool this off, Boeing may issue $10 billion in new stock which mitigates this risk but would dilute shareholder value, propelling the company back to square one as the labor dispute remains unresolved, Fortune reported.
Shares of Boeing closed Thursday's trading at $154.59, down 52 cents, on New York Stock Exchange.
