The financial toll of the Boeing stoppage currently stands at a substantial $572 million, with this figure expected to escalate further.
The speed of financial losses for Boeing is set to accelerate significantly if a settlement isn't reached within two weeks of the strike, as per Patrick Anderson, founder and president of a Michigan research firm. This firm has experience in estimating economic disruptions caused by strikes.
Anderson shared with CNN that while the first week's losses for Boeing are substantial, they will be insignificant compared to the losses in the subsequent weeks.
However, these losses are still less than the estimated $1.6 billion Boeing lost during the first week of last year's automaker strikes at General Motors, Ford, and Stellantis. The Boeing strike, as of now, hasn't had a noticeable impact on the economy, according to Anderson.
Boeing's deliveries to several airlines were delayed following a mid-air door blowout incident on a Boeing 737 Max in January, resulting in increased scrutiny by the Federal Aviation Administration (FAA).
Anderson stated that the two parties are still miles apart in negotiations, and with Boeing set to announce layoffs for many non-union employees shortly, the losses could climb to $1 billion by the beginning of the next week.
The majority of these losses stem from the near-stoppage of Boeing's commercial airplane production, with the company losing $445 million in the initial week due to the inability to complete and deliver aircraft to customers. Boeing receives the majority of its revenue upon delivery of the aircraft.
Losses for employees and suppliers amount to about $117 million in the first week. Union members, numbering approximately 33,000 who are on strike, and suppliers are the main contributors to these losses. The top hourly wage for union members is $51.30, resulting in a weekly salary of $2,052, excluding additional premiums and overtime.
Upcoming layoffs
Boeing CEO Kelly Ortberg informed employees in an email earlier this week that a large number of non-union workers will be placed on furlough in the near future. These furloughed employees will not be paid for one week out of every four during the duration of the strike. Additionally, the company announced a hiring freeze and a halt in new orders from vendors and suppliers to conserve cash.
Boeing's path to profitability is long regardless of the strike's length. The FAA limits the company's production rate of 737 Max jets due to efforts to enhance the quality of its assembly line.
Boeing's upcoming jet, the 777X, which is crucial for a return to profitability, has encountered issues in its test flights and is several years behind schedule for passenger certification. Boeing lacks the necessary funds to develop a new model jet to meet market demands, and its sales have lagged significantly behind its rival, Airbus.
The company's non-union factory in South Carolina, which manufactures the 787 Dreamliner, is still operational. However, despite the Dreamliner being the company's most expensive aircraft, it has only produced 32 of them in the first eight months of the year, equivalent to the number of Best-selling 737 Max jets built in the last few months. The Max, along with two freighter models, the 777F and 767F, are built in unionized plants currently shut down due to the strike.
The strike is expected to result in local losses of about $10 million, including those at businesses near the plants, according to Anderson.
The business operations of Boeing are significantly affected by the ongoing strike, with potential losses reaching $1 billion by the beginning of the next week. The near-stoppage of Boeing's commercial airplane production is the main contributor to these losses, resulting in a $445 million loss in the initial week.
Boeing's non-union employees are also impacted by the situation, with a large number of them set to be placed on furlough, affecting their income and the local economy.
