Boeing shares fall 2% as workers reject latest strike offer

Boeing shares fell by about 2% in pre-market trading in the United States on Thursday, after workers decided to extend their strike that has been ongoing for nearly 6 weeks, casting doubt on the company’s efforts to achieve financial stability and restore its public image.

Boeing shares fell 1.95% to $154 at the time of writing, according to Al Jazeera.

About 64% of Boeing factory workers on the US West Coast yesterday rejected the company’s latest offer, leading to the halt of production lines for almost all commercial aircraft produced by the company, including the 737 Max, which it considers the basis of its financial balance sheet.

The offer included a general wage increase of 35% over the next four years, but did not include a specific retirement plan, which is one of the main demands of the striking workers.

“Boeing will have to settle and make a higher offer because they are not in a position to go into (a fight),” said Nick Cunningham, an analyst at Agency Partners.

Analysts said the workers’ decision could affect the refinancing efforts the company needs to stabilize its operations after the strike derailed its recovery from a series of previous crises.

Boeing filed documents last week that give it the chance to raise up to $25 billion to avoid losing its investment-grade rating, in addition to securing a $10 billion loan.

But while many analysts say the company would prefer to wait until the strike is over and start generating more revenue through its deliveries before heading to financial markets, the labor-management conflict is putting it under increasing pressure to settle.

“We don’t rule out raising capital before the strike ends … depending on market conditions,” said Seth Saifman, an analyst at JPMorgan, after the workers’ decision.

Boeing announced last Friday that it would cut 17,000 jobs, or 10% of its global workforce, and save $5 billion in costs, in continuation of the chaos that has been ongoing at the company for a year, after an emergency occurred during a flight of a 737 Max 9 aircraft belonging to Alaska Airlines.