Week 4: IAM-Boeing strike

Update, October 2:

Here’s a new twist. An Australian newspaper reports that Virgin Blue may seek damages from Boeing and the IAM over the strike-induced delays of the 777s the airline wants. We think Boeing’s customer contracts preclude strike-caused delays. The IAM liability, if any, is another matter.

September 29:

Seattle Times: Dominic Gates has this detailed analysis of the strike and its cost to both sides.

One piece of math in the article that Dom didn’t do is to present the daily cash drain for Boeing. Based on his information that the monthly cash cost is about $1.3 billion, this means the daily cash cost is about $43 million. This compares with the widely reported figure of $100 million to $110 million a day, which was actually deferred or “lost” revenue, but which is also quite a bit higher than it should be because these figures don’t take into account the unaffected businesses within Boeing Commercial Airplanes that continue to produce revenue: Alteon (pilot training), Aviall (maintenance) and Jeppessen (maps and related stuff). We estimated that strike-related BCA revenue loss was more like $75 million to $83 million a day.

An IAM official predicted at the start of the strike that the IAM could bleed Boeing of its $10 billion in cash in a matter of a few months. Not hardly. Certainly $1.3 billion a month in cash loss is not chicken feed, but it’s also only one-third of the widely quoted figures.

Everett Herald: The IAM’s health benefits end Oct. 1. Some inside Boeing told us they believe that this event will help trigger a settlement.

One Comment on “Week 4: IAM-Boeing strike

  1. Boeing management has no clue what this strike will cost them. The hidden costs of bad morale and restarting the lines run into 6 months and more. Many will decide to retire early and leave.

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