Boeing Co. will be unable to deliver more than two dozen airplanes to customers this month as scheduled because of the continuing strike by its Machinists union, the company's chief financial officer said Wednesday.
James Bell told analysts that the 25 to 30 scheduled September deliveries "obviously won't be met and made." The shortfall could be made up later if the 13-day-old strike is settled soon, although "that opportunity diminishes over time as the strike goes on," he said.
The aerospace manufacturer has not disclosed any estimates for potential losses from the walkout.
More than 18,000 assembly workers went on strike Sept. 2 at the Chicago-based company's commercial airplane plants in the Seattle area; Gresham, Ore.; and Wichita, Kan. No talks have since been held or are scheduled, and Bell said the two sides remain about $1 billion apart on terms for a three-year contract.
"That's pretty significant, considering the fact that today their contract makes them the highest-paid Machinists in the industry," Bell said at the Morgan Stanley conference in Phoenix. "Clearly, our offer on the table continues to allow them to enjoy that position, because that's where we want them to be. ... We'll just have to work our way through trying to close that gap."
The Machinists have called Boeing's offer "insulting" and said it falls woefully short on issues ranging from health care costs to pensions.
Analyst Paul Nisbet with JSA Research said any delay in delivering airplanes will mean a deferral of revenue and profits. But he said it's highly unlikely customers will immediately cancel orders and go with rival European aircraft maker Airbus. That's because it can take years to receive an airplane after it is ordered, so being delayed by several months is better than placing a new order with a competitor and waiting even longer.
Nisbet said he wouldn't be surprised if it takes as long as a month before the two sides return to the bargaining table, and he expects a tough fight as Boeing wrestles with what the union wants versus what the company can afford.
"Boeing has to keep closer to what (it has) offered or suffer consequences that would not be good for their bottom line," he said.
Bell declined to say how long the company expects the strike to last but noted that previous such walkouts have lasted about two months.
"There isn't a definitive point at which things get bad and it'll take longer to get back on track," he said. "The real issue for us is to get it settled."