How will the Boeing strike affect the company and air travelers? Broad impact on the US economy

Boeing is facing significant challenges as more than 30,000 of its workers, represented by the International Association of Machinists and Aerospace Workers (IAM), have begun a strike after rejecting a contract that promised a 25% wage increase over four years. 94.6% had voted in favour of rejecting the contract, which they say does not do enough to recompense workers for stagnant pay since the 2008 financial crash.

“This is about respect, this is about addressing the past, and this is about fighting for our future,” IAM District 751 President Jon Holden said.

This labor action, the first in 16 years, is expected to disrupt production of key aircraft models, including the 737 Max and 777 jets, which are critical to Boeing’s operations and financial recovery.

The impact for Boeing

Historically, strikes at Boeing have led to significant production delays and financial losses. For instance, a 57-day strike in 2008 resulted in daily losses of tens of millions of dollars, severely impacting the company’s output and financial health. The current strike could similarly hinder Boeing’s ability to meet delivery schedules, particularly as airlines are increasingly reliant on timely aircraft deliveries to meet rising travel demands post-pandemic

Analysts estimate that a prolonged strike could cost Boeing up to $3.5 billion in cash flow, as the company typically receives around 60% of the sale price upon delivering a new aircraft

The impact for air travellers

While the strike may not immediately disrupt commercial flights, it could pose a risk to future travel plans. Airlines depend on new aircraft to expand their fleets and replace aging planes. Delays in aircraft production can lead to a shortage of available flights, potentially driving up ticket prices as demand outstrips supply.

Ultimately, it is up to the airline to deal with the labor issue and prevent this happening.

The impact on the US economy

Boeing is one of the largest exporters in the United States, and a disruption in its operations can have far-reaching implications. The company contributed over $200 million in state and local taxes in Washington in 2022 and spent more than $2.25 billion with suppliers across the state. A strike could destabilize these suppliers and the broader supply chain, leading to job losses and economic downturns in regions dependent on Boeing’s operations.