Boeing Investors to Analyze Cost Impact of Spirit AeroSystems Labor Deal

Boeing investors will closely examine the cost implications of a recent labor deal struck by Spirit AeroSystems when Boeing releases its second-quarter financial results. The agreement, reached with the machinists union on June 29 after a week-long strike, raises wages by at least 23.5% over four years. Analysts are concerned about the potential impact on aircraft production costs for Boeing.

Aerospace experts highlight the significant rise in the cost of skilled touch labor and wonder if Spirit’s financial situation could absorb the higher labor costs, especially as they expect cash burn in 2023. With inflation typically addressed through contractual escalation clauses, Spirit’s limited financial capacity may not allow for passing on the rising costs to airlines.

Investors are also interested in whether the work stoppage delayed the production of Boeing’s popular 737 aircraft. Data suggests a slowdown in fuselage deliveries from Spirit, impacting Boeing’s production and deliveries throughout the year.

Furthermore, Boeing’s defense business will face scrutiny after the indefinite delay of the first crewed launch of its Starliner spacecraft in June. Boeing Defense CEO Ted Colbert has already indicated that the defense unit’s performance for the second quarter might resemble the negative margins observed in the first quarter due to charges on the KC-46 program.

Investors will be keen to assess Boeing’s overall performance in light of these challenges and look for improvements in the company’s financial results.

Sources: AirGuide Business airguide.info, msn.com, reuters.com, boeing.com