Boeing (BA) stock hovered near 52-week lows on Tuesday after the planemaker’s largest union went on strike last week and analysts estimated that the company could lose over $100 million per day amid the work stoppage.
Members of the International Association of Machinists and Aerospace Workers (IAM) went on strike last Friday after rejecting a contract offer from Boeing. The Seattle-area workers help build the plane maker’s most popular 737 MAX and other jets.
The timing and length of the strike could put the company’s recovery at stake as its new CEO, Kelly Ortberg, tries to get past recent production missteps.
A source familiar with the negotiations told Yahoo Finance that IAM and Boeing representatives were meeting in person on Tuesday with a mediator helping to facilitate the talks. Boeing is “ready to hammer out an agreement,” according to the source.
An IAM spokesperson confirmed the meeting in an email but did not provide further details on where negotiations stood.
The company laid out aggressive cost-cutting measures on Monday, including a hiring freeze. The Arlington, Va.-based company is also considering temporary furloughs for many employees in the coming weeks.
“[Boeing has] a lot of pressure to get their assembly line in good order,” Morningstar equity analyst Nicolas Owens told Yahoo Finance. “And the strike interferes with that and delays any progress they were making on basically decertifying their assembly process for planes like the 737.”
While Moody’s recently placed Boeing’s credit rating under review, S&P Global said its status is safe for now, provided the strike is short-lived, which many Wall Street analysts expect it will be.
“A shorter strike, on the order of weeks, would likely be manageable for Boeing and not lead to a negative rating action. However, we believe an extended strike would be costly and difficult to absorb, given the company’s already strained financial position,” said S&P said in a statement this week.
The aircraft manufacturing giant has been navigating a terrible year, starting in early January when the fuselage of a 737 Max 9 ripped open at 16,000 feet during an Alaska Airlines (ALK) flight.
The incident led to a series of regulatory problems, investigations, lawsuits, production delays, a CEO replacement, and a tumbling stock price.
Last month Ortberg, an aerospace industry veteran and Boeing outsider, took over the top job at the company.
At the Morgan Stanley Laguna Conference last Friday, CFO Brian West noted “good momentum” prior to the strike, with “ramping production, while, at the same time, incorporating significant improvements” into the manufacturer’s quality and production system.
Boeing shares are down more than 35% year to date. They touched a 52-week low on Monday. The company is expected to report quarterly results next month.
