Boeing strike poses challenge to MAX targets, supply chain, CFO says
Adds comments from CFO, context, changes packaging slug
By Allison Lampert and Abhijith Ganapavaram
Sept 13 (Reuters) -A strike beginning Friday by more than 30,000 of Boeing's U.S. West Coast factory workers will make it harder for the planemaker to meet a 737 MAX production target and stabilize its supply chain, CFO Brian West said on Friday.
West also told the Morgan Stanley Laguna Conference he expects third-quartermargins from the company's defense and space unit to be negative, similar to those in the second quarter.
Workers from Seattle and Portland, Oregon, who produce the MAX and other jetswalked off the job after overwhelmingly rejecting a contract deal due to demands for higher pay. The workers' first strike since 2008 comes as Boeing is under heavy scrutiny from U.S. regulators and customers after a door panel blew off a 737 MAX jet mid-air in January.
West said Boeing had made progress towards ramping production of its strongest selling jet back to 38 a month by year's end, despite earlier skepticism from rating agencies over the target.
"We've been making good progress on stabilizing production and preparing for that 38 per month by the end of the year. Now, obviously that's going to take longer," West said.
West, however, would not comment on specifics related to the target, which depends on the duration of the strike.
The strike is creating more uncertainty and concern for suppliers of parts and components for programs like the 737 MAX. Many were already having difficulty planning production due to Boeing’s repeated changes to internal forecasts for suppliers.
West said a company priority was stabilizing its supply chain, but that "objective just got harder."
West suggested Boeing would stop taking parts from some suppliers on programs impacted by the strike where the planemaker has ample inventory. The company's 787 widebody jet is not impacted, as it is built in South Carolina by a non-unionized workforce.
Asked about supply chain, West said for non-787 programs, if the supplier is not behind and the company has enough stock, "you know, don't deliver anymore."
He said this messaging is "happening overnight and as we speak."
Reporting By Allison Lampert and Abhijith Ganapavaram
Editing by Nick Zieminski
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
