Shares of Boeing (BA) hovered near a 52-week low on Tuesday as the planemaker scrambled to reach a deal with its largest striking union while cutting costs to save cash.
On Tuesday, Boeing shares rose to about $157 each, just $3 below recent lows.
The Arlington, Va.-based company is facing a strike by its machinists’ union over wage increases that began last Friday. Crucially, the company has halted production of its best-selling 737 Max.
The timing and duration of the strike could jeopardize the company’s recovery as new CEO Kelly Ortberg scrambles to navigate recent production glitches.
“They’re under a lot of pressure to get their assembly line in order. And the strike disrupts that and slows down any progress they’ve made in essentially decertifying their assembly process for airplanes like the 737,” Morningstar analyst Nicolas Owens told Yahoo Finance on Wednesday.
A source familiar with the negotiations told Yahoo Finance that both sides would meet in person on Tuesday with a mediator to facilitate the talks.
Boeing is “ready to reach an agreement” and Tuesday was the earliest the union met, the source said.
At the same time, the company unveiled aggressive cost-cutting measures on Monday, including a hiring freeze. The company is also considering temporary furloughs for many employees in the coming weeks.
Although Moody’s recently re-rated Boeing’s credit rating, S&P Global said its credit rating is safe for now, provided the strike is short-lived. Many Wall Street analysts expect that to be the case.
“A shorter strike, on the order of weeks, would likely be manageable for Boeing and would not result in a negative rating action. However, we believe a longer strike would be costly and difficult to absorb given the company’s already strained financial position,” S&P said in a statement this week.
The aircraft manufacturer has had a terrible year, which began in early January when the fuselage of a 737 Max 9 ruptured at 16,000 feet during an Alaska Airlines (ALK) flight.
The incident led to a series of regulatory issues, investigations, lawsuits, production delays, a CEO replacement and a plummeting stock price.
Last month, Ortberg, an aerospace industry veteran and Boeing outsider, took over the company’s top job.
At last Friday’s Morgan Stanley Laguna conference call, CFO Brian West noted that there had been “good momentum” prior to the strike, with “production ramping up while making significant improvements” to the manufacturer’s quality and production system.
Boeing shares have fallen more than 35% so far this year, hitting a 52-week low on Monday. The company is expected to report quarterly results next month.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X on @ines_ferre.
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